2. On February 1, 2023, Marsh Contractors agreed to construct a building at a contract price of$17,400,000. Marsh estimated total construction costs would be $12,000,000 and the projectwould be finished in 2025. Information relating to the costs and billings for this contract is asfollows:Total costs incurred to dateEstimated costs to completeCustomer billings to dateCollections to date2023202420252023$4,500,0007,500,0006,600,0006,000,000InstructionsFill in the correct amounts on the following schedule. For percentage-of-completion accountingand cost-recovery accounting, show the gross profit that should be reported for 2023, 2024, and2025.Percentage-of-CompletionGross Profit202320242024$7,920,00020255,280,00012,000,00010,500,0002025$13,800,000-0-16,800,00016,500,000Cost-RecoveryGross Profit

It must be understand that revenue on contracts must be recognized on proportionate basis under percentage of completion method instead of recognizing the revenue on one time basis. hence gross profit on such contract must be calculated accordingly.

Business

Accounting

2. On February 1, 2023, Marsh Contractors agreed to construct a building at a contract price of $17,400,000. Marsh estimated total construction costs would be $12,000,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 2024 Instructions Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and cost-recovery accounting, show the gross profit that should be reported for 2023, 2024, and 2025. 2025 2023 $4,500,000 7,500,000 6,600,000 6,000,000 Percentage-of-Completion Gross Profit 2023 2024 2024 $7,920,000 5,280,000 12,000,000 10,500,000 2025 2025 $13,800,000 -0- 16,800,000 16,500,000 Cost-Recovery Gross Profit

2. On February 1, 2023, Marsh Contractors agreed to construct a building at a contract price of $17,400,000. Marsh estimated total construction costs would be $12,000,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 2024 Instructions Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and cost-recovery accounting, show the gross profit that should be reported for 2023, 2024, and 2025. 2025 2023 $4,500,000 7,500,000 6,600,000 6,000,000 Percentage-of-Completion Gross Profit 2023 2024 2024 $7,920,000 5,280,000 12,000,000 10,500,000 2025 2025 $13,800,000 -0- 16,800,000 16,500,000 Cost-Recovery Gross Profit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: How much gross profit should be reported for 2021?

A: Percentage-of-Completion Method-: The Percentage of Completion Method comes under the revenue…

Q: 29) Horner Construction uses the method. In percentage-of-completion 2024, Honer began work on a…

A: The gross profit is calculated as the difference between the revenue and cost of goods sold. The…

Q: Question Three: $960,000. The job was completed in 2022. The following information is available:…

A: Percentage of completion is the method where the revenue and accrued expense for the year is…

Q: Ramos, Inc. began work in 2017 on contract #3814. The contract price is $7,200,000. The contract is…

A: when there is percentage of completions is applied in order to calculate the profit till date. the…

Q: Using the percentage-of-completion method, calculate the percentage complete for each year of the…

A: This method is used to recognize the revenue from the ongoing long-term construction contracts.…

Q: On February 1, 2023, Sunland Contractors agreed to construct a building at a contract price of…

A: TO ASCERTAIN THE CURRENT YEAR'S PROFIT IT IS NECESSARY TO RECOGNIZE THE COST AS WELL AS REVENUE ON…

Q: Assume that Sunland Construction Company has a non-cancellable contract to construct a $4,520,000…

A: Journal entry is a primary entry that records the financial transactions initially. The transactions…

Q: Oriole Enterprises Ltd. has entered into a contract beginning in February 2023 to build two…

A: Percentage of Completion MethodThis method is used to determine the revenue from the ongoing…

Q: Under the percentage-of-completion method, calculate the construction costs to be expensed in 2024.…

A: The construction costs which are required to be expensed for the year as per the percentage of…

Q: What is the total amount of Revenue from Long-Term Contracts recognized for 2021 and what is the…

A: Contract Price = $18,222,000 Contract billing and Payment each Quarter = $ 12,000,000 Percentage of…

Q: Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod…

A: 1. Compute Gross Profit or Loss for Each Year - 2024 - Gross Profit (Loss) Recognized: $140,000…

Q: Cullumber Enterprises Ltd. has entered into a contract beginning in February 2023 to build two…

A: Solution: Computation of journal entry to record long term contract revenue, expenses and losses for…

Q: A construction company is constructing an office building under contract for Codwell Company and…

A: Introduction:- Revenues are the assets generated by a company's operations and commercial…

Q: Oriole Construction is constructing an office building under contract for Cannon Company and uses…

A: Construction in Process account has debit balance. Billings on Construction account has credit…

Q: answer must be in table format or i will give down vote

A: The total contract revenue is the sum of the estimated cost and the fixed fee. In this case, the…

Q: In 2018, Ronaldo Construction Inc. agreed to construct an apartment building at a price of $10…

A: Construction accounting, is a form of project accounting applied to construction projects. It…

Q: Grein's Construction Company, entered into a fixed-price contract with Alexa Co. on July 1, 2024, to…

A: Gross profit Gross profit is the amount determined by reducing cost of sales from the sales revenue…

Q: During 2025, Ivanhoe Company started a construction job with a contract price of $1,610,000. The job…

A: 2025 2026 2027 Billings during the year $302,000 $594,000 (i.e. $896,000-$302,000) $714,000…

Q: Novak, Inc. began work on a $ 6,466,000 contract in 2020 to construct an office building. During…

A: Total estimated cost = Cost incurred + estimated additional costs to complete =…

Q: stimat- r this

A: Under % the age completion method the revenue is recognized on the basis of the cost…

Q: Oriole Construction is constructing an office building under contract for Cannon Company and uses…

A: Computation of Cost to be Recognized for the year-end December 31, 2022 Cost = Total Estimated…

Q: Curtiss Construction Company, Incorporated, entered into a fixed-price contract with four-story…

A: Part 1: Compute Gross Profit or Loss for Each Year (Assuming No Revenue Recognition Over Time):Year…

Q: Build a Bridge Inc. prepares its financial statements in accordance with IFRS. The company started…

A: The percentage of completion approach is used to recognise income and expenses related to long-term…

Q: The Leto Construction Company began work on a $12.000 contract on 1/1/20. Planned completion was in…

A: Construction in progress is equal to the contract value multiplied by the percentage of completion.…

Q: Sheridan Construction Co. uses the percentage-of-completion method. In 2024, Sheridan began work on…

A: An income statement, also known as a profit and loss statement or P&L statement, is a financial…

Q: On April 12, 2021, Jacob’s Construction contracted to build a 400 Unit Apartment Complex at a…

A: The percentage of completion method is used when accounting for construction contracts. It helps in…

Q: Rogers Ltd. has entered into a contract beginning in February 2020 to build two warehouses for ocean…

A: The question is based on the concept of Financial Accounting. As per the Bartleby guidelines we are…

Q: Required: 2,250,000 4,240,000 1. Compute gross profit or loss to be recognized as a result of this…

A: Revenue:The revenue refers to the gross revenue. It is the sum of all the sources where the company…

Q: A company uses the percentage-of-completion method of accounting. In 2020, the company began work a…

A: The percentage-of-completion is a method of construction used by the organization for identifying…

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

2. On February 1, 2023, Marsh Contractors agreed to construct a building at a contract price of
$17,400,000. Marsh estimated total construction costs would be $12,000,000 and the project
would be finished in 2025. Information relating to the costs and billings for this contract is as
follows:
Total costs incurred to date
Estimated costs to complete
Customer billings to date
Collections to date
2023
2024
2025
2023
$4,500,000
7,500,000
6,600,000
6,000,000
Instructions
Fill in the correct amounts on the following schedule. For percentage-of-completion accounting
and cost-recovery accounting, show the gross profit that should be reported for 2023, 2024, and
2025.
Percentage-of-Completion
Gross Profit
2023
2024
2024
$7,920,000
2025
5,280,000
12,000,000
10,500,000
2025
$13,800,000
-0-
16,800,000
16,500,000
Cost-Recovery
Gross Profit

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Follow-up Questions

Read through expert solutions to related follow-up questions below.

Follow-up Question

Prepare all necessary journal entries for 2024.

Solution

by Bartleby Expert

SEE SOLUTION

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Use the percentage-completion method and show all calculations and explanation in detail.
Cullumber Construction Co. uses the percentage-of-completion method. In 2024, Cullumber began work on a contract for $23200000; it was completed in 2025. The following cost data pertain to this contract: Year Ended December 31 2024 2025 Cost incurred during the year $8736000 $5720000 Estimated costs to complete at the end of year 5824000 The amount of gross profit to be recognized on the income statement for the year ended December 31, 2025 is ○ $3456000. ○ $8744000. $2920000. $3560000.
On January 1, 2021, Turnstile Construction Company Inc. contracted to build a medical practice office building for Medicine Points Inc. for a total contract price of $2,000,000. On January 1, Turnstile estimated that it would take three years to complete the building. On December 31, 2023, the building was completed. Following are contract costs incurred, estimated costs to complete the contract, and accumulated billings to Medicine Points Inc. for 2021, 2022, and 2023 At 12/31/21 At 12/31/22 At 12/31/23 Contract costs incurred to date $ 540,000 $1,600,000 Estimated costs to complete the contract 1,500,000 500,000 Billings to Medicine Inc. $2,200,000 -0. 300,000 1,400,000 2,000,000 Required: Assuming this contract meets the requirements for recognizing revenue over time, prepare schedules to compute the profit or loss Turnstile Company would recognize as a result of this contract for the years ended December 31, 2021, 2022, and 2023.
Sheridan Construction Company has entered into a contract beginning January 1, 2025, to build a parking complex. It has been estimated that the complex will cost $596,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $902,000. The following data pertain to the construction period. Costs to date Estimated costs to complete Progress billings to date Cash collected to date (a) $256,280 339,720 270,000 Gross profit recognized in 2025 Gross profit recognized in 2026 2025 Sok and Media 240,000 Gross profit recognized in 2027 $ GA $ LA 2026 Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter O. Do not leave any fields blank.) 5 $429,120 166,880 555,000 505,000 2027 $606,000 902,000 902.000
During 2023, Sunland Company started a construction job with a contract price of $1,792,000. The job was completed in 2025. The following information is available. The contract is non-cancellable. Costs incurred to date Estimated costs to complete Billings to date (non-refundable) Collections to date (a) 2023 2024 $448,000 $924,000 672,000 336,000 1,008,000 907,200 302.400 308,000 0000 2025 $1,198,400 0 1,792,000 1,596,000 Calculate the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) nont ROOF
Explain clearly
Manson Construction Corp. has consistently used the percentage-of-completion method. In 2020, Manson started work on a $10,500,000 construction contract that was completed in 2021. The following information was taken from Manson’s 2020 accounting records: Billings to date $3,300,000 Costs incurred 3,150,000 Collections to date 2,100,000 Estimated costs to complete 6,300,000 What is the amount of revenue that will be recorded in 2020? In 2020, Pop Construction Corp. began work on a contract for $ 3,700,000. Other details follow: 2020 Costs incurred during the year.................................................................... $ 1,800,000 Estimated costs to complete as of December 31................................... 1,200,000 Billings during the year................................................................................. 1,650,000 Collections during the…
Cullumber, Inc. began work on a $7,164,000 contract in 2020 to construct an office building. During 2020, Cullumber, Inc. incurred costs of $1,960,630, billed its customers for $1,255,000, and collected $920,000. At December 31, 2020, the estimated additional costs to complete the project total $3,338,370.Prepare Cullumber’s 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record costs incurred enter a debit amount enter a credit amount enter an account title to record costs incurred enter a debit amount enter a credit amount (To record costs incurred.) enter an account title to record billings enter a debit amount…