PARAMOUR Co. was contracted by LOVER, Inc. for the construction of a flyover in 20x1. The contractprice is P10M. Information on costs is as follows:20x11,600,000 6,000,00020x2Total costs incurred to dateEstimated costs to complete6,400,000 1,500,000How much revenue is recognized in 20x2? A, B and C formed a joint operation for the sale of assorted fruits during the Christmas season. Theirtransactions during the two-month period are summarized below:Joint operation8,500 Nov. 15 Cash sales-CNov. 5 Merchandise-A20,40012 Merchandise-B7,00018 Cash sales-C4,20014 Freight-in-CDec. 10 Purchases-C20030 Merchandise-B1,2103,500 Dec. 25 Unsold mdse. charged to A54022 Selling expenses-C550The joint arrangement provided for the division of gains and losses among A, B and C in the ratio of2:3:5. The joint operation is to close on December 31, 2008.What is the amount of cash that A will receive on final settlement?

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PARAMOUR Co. was contracted by LOVER, Inc. for the construction of a flyover in 20x1. The contract price is P10M. Information on costs is as follows: 20x1 20x2 Total costs incurred to date 1,600,000 6,000,000 Estimated costs to complete 6,400,000 1,500,000 How much revenue is recognized in 20x2?

PARAMOUR Co. was contracted by LOVER, Inc. for the construction of a flyover in 20x1. The contract price is P10M. Information on costs is as follows: 20x1 20x2 Total costs incurred to date 1,600,000 6,000,000 Estimated costs to complete 6,400,000 1,500,000 How much revenue is recognized in 20x2?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

PARAMOUR Co. was contracted by LOVER, Inc. for the construction of a flyover in 20x1. The contract
price is P10M. Information on costs is as follows:
20x1
1,600,000 6,000,000
20x2
Total costs incurred to date
Estimated costs to complete
6,400,000 1,500,000
How much revenue is recognized in 20x2?

A, B and C formed a joint operation for the sale of assorted fruits during the Christmas season. Their
transactions during the two-month period are summarized below:
Joint operation
8,500 Nov. 15 Cash sales-C
Nov. 5 Merchandise-A
20,400
12 Merchandise-B
7,000
18 Cash sales-C
4,200
14 Freight-in-C
Dec. 10 Purchases-C
200
30 Merchandise-B
1,210
3,500 Dec. 25 Unsold mdse. charged to A
540
22 Selling expenses-C
550
The joint arrangement provided for the division of gains and losses among A, B and C in the ratio of
2:3:5. The joint operation is to close on December 31, 2008.
What is the amount of cash that A will receive on final settlement?

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