On March 1, 2025, Pharoah Construction Company contracted to construct a factory building for Bloom Manufacturing Inc. for a totalcontract price of $8,330,000. The building was completed by October 31, 2027. The annual contract costs incurred, estimated costs tocomplete the contract, and accumulated billings to Bloom for 2025, 2026, and 2027 are given below.202520262027Contract costs incurred during the year$2,662,800$2,188,000 $2,389,200Estimated costs to complete the contract at 12/31Billings to Bloom during the year3,180,0003,677,200 2,389,2003,480,000-0-1,670,000(a1)Using the percentage-of-completion method, prepare a schedule to compute the profit or loss to be recognized as a result of thiscontract for the year ended December 31, 2025. (Ignore income taxes.) (If answer is 0, please enter O. Do not leave any fields blank.Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)2025LA%

Schedule of Profit or Loss (Percentage-of-Completion Method) - Pharoah Construction CompanyContract…

Answered: On March 1, 2025, Pharoah Construction…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 9MC

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On March 1, 2020, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by October 31, 2022. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2020, 2021, and 2022 are given below. 2020 2021 2022 Contract costs incurred during the year $2,880,000 $2,230,000 $2,190,000 Estimated costs to complete the contract at 12/31 3,520,000 2,190,000 –0– Billings to Fabrik during the year 3,200,000 3,500,000 1,700,000 Instructions a. Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) b. Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a…
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