Sandhill Inc. began work on a $8,900,000 non-cancellable contract in 2023 to construct an office building. During 2023, Sandhill incurred costs of $1,672,000, billed its customers for $1,450,000 (non-refundable), and collected $900,000. At December 31, 2023, the estimated future costs to complete the project totalled $2,728,000. Prepare Sandhill's 2023 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.)

Sandhill Inc. began work on a $8,900,000 non-cancellable contract in 2023 to construct an office building. During 2023, Sandhill incurred costs of $1,672,000, billed its customers for $1,450,000 (non-refundable), and collected $900,000. At December 31, 2023, the estimated future costs to complete the project totalled $2,728,000. Prepare Sandhill's 2023 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Novak, Inc. began work on a $ 6,466,000 contract in 2020 to construct an office building. During 2020, Novak, Inc. incurred costs of $ 1,547,340, billed its customers for $ 1,085,000, and collected $ 1,013,000. At December 31, 2020, the estimated additional costs to complete the project total $ 3,003,660.Prepare Novak’s 2020 journal entries using the percentage-of-completion method
Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,480,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date At 12-31-2024 At 12-31-2025 $367,000 3,303,000 728,000 $ 2,856,000 1,904,000 2,330,000 Ren 1 and 2 10% Dan 3 60% Answer is not complete. Complete this question by entering your answers in the tabs below. Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three…
Build a Bridge Inc. prepares its financial statements in accordance with IFRS. The company started work on a contract in May 2023 to build a small bridge at a fixed price of $10,000,000. The bridge was to be completed by September 2025 at a total estimated cost of $8,000,000. Total cumulative costs incurred by the end of December 2023 and 2024 were $2,000,000 and $5,500,000, respectively. Because of cost overruns in 2024, it is now expected that the project will cost $800,000 more than originally estimated. Final costs at the end of the project totalled $9,000,000. Required Determine the amount of gross profit to be recognized for the years ending December 31, 2023 and 2024. First calculate the percent complete on December 31, 2023. The percent complete on December 31, 2023 is %.
Indiana Co. began a construction project in 2018 with a contract price of $162 million to be received when the project is completed in 2020. During 2018, Indiana incurred $33 million of costs and estimates an additional $85 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed. Suppose that, in 2019, Indiana incurred additional costs of $64 million and estimated an additional $51 million in costs to complete the project. Indiana (Do not round your percentage calculated): Multiple Choice Recognized $3.00 million loss on the project in 2019. Recognized $6.13 million gross profit on the project in 2019. Recognized $3.13 million loss on the project in 2019. Recognized $3.13 million gross profit on the project in 2019.
On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows: January 1, 2024 32 March 1, 2024 June 30, 2024 October 1, 2024 January 31, 2025 April 30, 2025 August 31, 2025 On January 1, 2024, 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 2024 and 2025. The company's other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The company's fiscal year-end is December 31. Required: Using the weighted-average interest method, answer the following questions: $ 1,000,000 600,000 800,000 600,000 270,000 585,000 900,000 1.…
In February 2020, Sandhill Construction signed a contract and commenced construction on a parking garage. The total contract price was $90.8 million and was expected to be completed in July 2024 at a total estimated cost of $83.0 million. Payment by the customer was to be made in several stages, based on significant events and dates throughout the construction timeline. The customer was to have control over the parking garage and was able to make major changes to the project during the construction process. Sandhill’s year-end was September 30.By the end of September, 2020, Sandhill had incurred $20,750,000 in costs and had invoiced $10,400,000 in progress billings. $7,600,000 of the progress billings had been collected.By September 30, 2021, Sandhill had incurred $40,200,000 in total costs and had invoiced $45,500,000 in progress billings, including the progress billings in 2020. Of the total billings, $30,500,000 in total had been collected. Also, Sandhill reviewed its cost estimates…
Brady Construction Company contracted to build an apartment complex for a price of $6,100,000. Construction began in 2024 and was completed in 2026. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Situation 1 2 3 4 5 6 Situation 1 2 2|3 3 2024 Costs Incurred during Year 2026 $1,230 2,840 2,480 1,220 2,070 2,900 4 5 6 $ 1,610 1,610 1,610 610 610 610 2025 $ 2,460 1,230 2,460 3,110 3,110 3,110 Required: Complete the following table. Note: Do not round intermediate calculations. Enter your answers in whole dollars and not in thousands of dollars (i.e., $400 thousand should be entered as $400,000). Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign. 2024 Estimated Costs to Complete (As of the End of the Year) 2024 2025 2026 $ 3,690 3,690 3,690 4,270 4,270 5,655 $ 1,230 2,840 2,380 930 Revenue Recognized Over Time 2025…
Domestic
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,075,000. During 2021, costs of $2,030,000 were incurred, with estimated costs of $4,030,000 yet to be incurred. Billings of $2,536,000 were sent, and cash collected was $2,280,000. In 2022, costs incurred were $2,536,000 with remaining costs estimated to be $3,645,000. 2022 billings were $2,786,000, and $2,505,000 cash was collected. The project was completed in 2023 after additional costs of $3,830,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time. Required:1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.2a. Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred).2b. Prepare journal entries for 2022 to record the transactions described (credit…
Beck Construction Company began work on a new building project on January 1, 2023. The project is to be completed by December 31, 2025, for a fixed price of $159 million. The following are the actual costs incurred and estimates of remaining costs to complete the project that were made by Beck's accounting staff: Years 2023 2024 2025 Actual costs incurred in each year $ 43 million $ 71 million $ 48 million Years 2023 2024 2025 Required: What amount of gross profit (or loss) would Beck record on this project in each year, assuming that Beck recognizes revenue for this project upon completion of the project? Note: Enter "None" if there is no requirement of recognizing profit or loss. Loss amounts should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Gross Profit (or Loss) recognized Gross profit Gross profit Gross profit Estimated remaining costs to complete t project (measured at December 31 of each year) $ 86 million. $ 71…
On February 1, 2024, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2024, costs of $2,000,000 were incurred with estimated costs of $4,000,000 yet to be incurred. Billings of $2,500,000 were sent, and cash collected was $2,250,000. In 2025, costs incurred were $2,500,000 with remaining costs estimated to be $3,600,000. 2025 billings were $2,750,000, and $2,475,000 cash was collected. The project was completed in 2026 after additional costs of $3,800,000 were incurred. The company’s fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion. Required: 1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years. 2a. Prepare journal entries for 2024 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred). 2b. Prepare journal entries for 2025 to record the transactions…
Curtiss Construction Company, Incorporated, entered into a fixed price contract with Axelrod Associates on July 1, 2024, to construct a four story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,240,000 The building was completed on December 31, 2026 Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows Percentage of completion Cests incurred to date Estimated costs to complete Billings to Axelrod, to date Required: At 12-11-2024 10% At 12-31-2025 $2,688,000 1,792,000 AT 12-11-2026 60% 100% $ 4,534,000 4,240,000 $363,000 3,267,000 724,000 2,250,000 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue…