Problem 4: Strong Construction Company was contracted on July 1, 2018 to constructa medium rise condominium for a contract price of P30M. The building is expected to becompleted in 3 years. Financial information from the records of Strong ConstructionCompany for 2018, 2019 and 2020 are given below:201820192020Contract costs incurredEst. costs to completeBillings during the year7,800,00018,200,0008,500,00017,200,0006,250,00015,000,0006,400,0006,500,000Requirement: Determine the amount to be reported as contract revenue, contract costsand profit for 2018, 2019 and 2020. Show all computations in good form.

Construction Contract: A construction contract is a contract between a customer and a general…

Answered: Problem 4: Strong Construction Company…

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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The Leto Construction Company began work on a $15,000 contract on 1/1/22. Planned completion was in 2024. The Percentage-of Completion method is used. Given the following at 12/31/22: Costs incurred to date Estimated costs to complete Billings to date Collections to date December 31, 2022 $2,500 9,500 4,000 3,800 The balance sheet location and the net amount of the 12/31/22 Combined CIP and Billings accounts are: Select one: O a. Current Liability of $1,500 O b. Current Liability of $200 c. Current Asset of $1,500 d. Current Liability of $875
4. In 2016, Omega Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the contract are as follows: Costs incurred during the year $238,000 Estimated costs to complete Partial billings Collections 2016 2017 2018 $319,600 $105,000 357,000 139,400 -0- 260,000 210,000 380,000 240,000 200,000 410,000 Assuming the performance obligation is satisfied over time, what would be the gross profit in 2016? a. $102,000 b. $260,000 c. $255,000 d. $425,000
Swifty Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $598,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $894,000. The following data pertain to the construction period. 2020 2021 2022 Costs to date $263,120 $412,620 $607,000 Estimated costs to complete 334,880 185,380 –0– Progress billings to date 272,000 545,000 894,000 Cash collected to date 242,000 495,000 894,000 (a) 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 0. Do not leave any fields blank.) Gross profit recognized in 2020 $ Gross profit recognized in 2021 $ Gross profit recognized in 2022 $ (b) Using the completed-contract method, compute the estimated…
48. ABC Construction Company began work on a contract in 2022 and completed the contract in 2023. The total contact price was P8,500,000. Information related to the construction project are as follows: 2022 2023 Costs incurred during the year P1,200,000 P6,250,000 Estimated costs to complete 4,800,000 - Progress billings during the year 1,450,000 7,050,000 Collections during the year 800,000 6,000,000 How much is the receivable balance as of December 31, 2023?
14. What is the Construction in Progress, net of Progress Billings at December 31, 2021, using zero profit method? 250,000 liability 250,000 asset 240,000 asset 240,000 liability Any other amount
8. How much is the Gross Profit/Loss Realized in 2018? * Triple Take Construction Co. began construction of a project in 2017 for a contract price of P9,600,000. The project is to be completed in 4 years or in the year 2021. The following are the details regarding the construction project 2017 2018 2019 Costs inenered to dnte Estimsted cost to complete Progess Billings to dnte Cash Collectiona for the year 2160,000 4,500,000 7,520,000 6840,000 5,500,000 1,690, 000 2,304,000 4,320,000 7,680,000 1,728.000 3,240,000 5,760,000 9. How much is the Gross Profit/Loss Realized in 2019? * Xurpas Homes entered into a construction agreement in 2018 for the construction of condominium buildings. The original contract price was P20,000,000 but a change order was issued in 2019 that increases the price by P2,000,000. The percentage of completion method is used by the company in recognizing revenue. The following are information regarding the company. 2018 10,200,000 10,200,000 9,800,000 8,760,000…
Explain clearly
36 Construction is constructing an office building under contract for Election Cafe. The contract calls for progress billings and payments of P620,000 each quarter. The total contract price is P7,440,000 and RegisterToVote estimates total costs of P7,100,000. RegisterToVote estimates that the building will take 3 years to complete, and commences construction on January 2, 2020. 36 At December 31, 2020, RegisterToVote estimates that it is 30% complete with the construction, based on costs incurred. What is the total amount of Revenue from Long-Term Contracts recognized for 2020 and what is the balance in the Accounts Receivable account assuming Election Cafe has not yet made its last quarterly payment? Revenue - 2,232,000 ; AR - 620,000 Revenue - 2,130,000 ; AR - 620,000 Revenue - 2,130,000 ; AR - 2,480,000 Revenue - 2,480,000 ; AR - 2,480,000 37At December 31, 2021, RegisterToVote Construction estimates that it is 75% complete with the building; however, the estimate of total costs…
On January 1, 2021, the company obtained a $3 million loan with a 10% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 March 1, 2021 June 30, 2021 October 1, 2021 January 31, 2022 April 30, 2022 August 31, 2022 On January 1, 2021, the company obtained a $3 million construction loan with a 10% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $4,400,000 and $6,400,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. $1,300,000 720,000 340,000 640,000 450,000 765,000 1,260,000 Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2.…
Answer is $1,800,000. Please explain the reasoning and calculations
Q3: An engineer determined the payback period of the project contract to be 9 years. The following table presents the project contact cost information: Annual cost First cost 15 M Salvage 5 M Contract 3M Ifi-13%, do you agree with that an engineer, and why?
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