Question 4 On 22 February 2018, Sun Company entered into a contract to build an apartment building. It will take 3 years to complete and is originally estimated that the building will cost $6,500,000 which is subject to revision. The contract price was $9,000,000. The following information pertains to the construction period. 2018 2019 2020 Cost to date $2,275,000 $5,280,000 $7,000,000 Estimated costs to complete 4,225,000 1,320,000 Progress billing to date 2,000,000 4,500,000 9,000,000 Cash collected to date 1,400,000 3,800,000 8,800,000 Required: (a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used. (b) Prepare all necessary journal entries for (c) Prepare a partial statement of financial position as at 31 December 2019, showing the balances in the receivables and inventory accounts. year 2020.

Question 4 On 22 February 2018, Sun Company entered into a contract to build an apartment building. It will take 3 years to complete and is originally estimated that the building will cost $6,500,000 which is subject to revision. The contract price was $9,000,000. The following information pertains to the construction period. 2018 2019 2020 Cost to date $2,275,000 $5,280,000 $7,000,000 Estimated costs to complete 4,225,000 1,320,000 Progress billing to date 2,000,000 4,500,000 9,000,000 Cash collected to date 1,400,000 3,800,000 8,800,000 Required: (a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used. (b) Prepare all necessary journal entries for (c) Prepare a partial statement of financial position as at 31 December 2019, showing the balances in the receivables and inventory accounts. year 2020.

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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