*P18-10 (LO5,6,7) (Long-Term Contract with Interim Loss) On March 1, 2017, 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, 2019. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2017, 2018, and 2019 are given below. 2017 2018 2019 Contract costs incurred during the year $2,880,000 $2,230,000 $2,190,000 Estimated costs to complete the contract at 12/31 Billings to Fabrik during the year 3,520,000 3,200,000 2,190,000 3,500,000 -0- 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, 2017, 2018, and 2019. (Ignore income taxes.) (b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore incomes taxes.)
*P18-10 (LO5,6,7) (Long-Term Contract with Interim Loss) On March 1, 2017, 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, 2019. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2017, 2018, and 2019 are given below. 2017 2018 2019 Contract costs incurred during the year $2,880,000 $2,230,000 $2,190,000 Estimated costs to complete the contract at 12/31 Billings to Fabrik during the year 3,520,000 3,200,000 2,190,000 3,500,000 -0- 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, 2017, 2018, and 2019. (Ignore income taxes.) (b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore incomes taxes.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:*P18-10 (LO5,6,7) (Long-Term Contract with Interim Loss) On March 1, 2017, 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, 2019. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to
Fabrik for 2017, 2018, and 2019 are given below.
2017
2018
2019
Contract costs incurred during the year
$2,880,000
$2,230,000
$2,190,000
Estimated costs to complete the
contract at 12/31
Billings to Fabrik during the year
3,520,000
3,200,000
2,190,000
3,500,000
-0-
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, 2017, 2018, and 2019. (Ignore income taxes.)
(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of
this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore incomes taxes.)
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