Homework Help is Here – Start Your Trial Now!
Business
Accounting
Sheridan Construction Inc. specializes in the construction of commercial and industrial buildings. The company is experienced in bidding on long-term construction projects of this type, with the typical project lasting from fifteen to twenty-four months. Sheridan uses the percentage-of-completion method. Progress toward completion is measured on a cost-to-cost basis. Sheridan began work on a contract at the beginning of 2023. Data for 2023 follow: Contract price $1,920,000 Estimated costs: Labour $408,000 Materials and subcontracts 840,000 Indirect costs 192,000 1,440,000 Estimated gross profit $480,000 At the end of 2023, the following was the actual status of the contract: Progress billings to date $1,070,400 Costs incurred to date: Labour $198,720 Materials and subcontracts 498,240 Indirect costs 72,000 $768,960 Latest forecast of total costs $1,440,000 It should be noted that included in the above costs incurred to date were standard electrical and mechanical materials stored on the job site, but NOT yet installed, costing $48,960. These costs should NOT be considered in the costs incurred to date.

Sheridan Construction Inc. specializes in the construction of commercial and industrial buildings. The company is experienced in bidding on long-term construction projects of this type, with the typical project lasting from fifteen to twenty-four months. Sheridan uses the percentage-of-completion method. Progress toward completion is measured on a cost-to-cost basis. Sheridan began work on a contract at the beginning of 2023. Data for 2023 follow: Contract price $1,920,000 Estimated costs: Labour $408,000 Materials and subcontracts 840,000 Indirect costs 192,000 1,440,000 Estimated gross profit $480,000 At the end of 2023, the following was the actual status of the contract: Progress billings to date $1,070,400 Costs incurred to date: Labour $198,720 Materials and subcontracts 498,240 Indirect costs 72,000 $768,960 Latest forecast of total costs $1,440,000 It should be noted that included in the above costs incurred to date were standard electrical and mechanical materials stored on the job site, but NOT yet installed, costing $48,960. These costs should NOT be considered in the costs incurred to date.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 10C
See similar textbooks
icon
Related questions
Question

Assume, instead of $1,440,000, the latest forecast of total costs at the end of 2023 was $1,968,000. How much income would Sheridan then report for the year 2023? 

Sheridan Construction Inc. specializes in the construction of commercial and industrial buildings. The company is experienced in bidding on long-term construction projects of this type, with the typical project lasting from fifteen to twenty-four months. Sheridan uses the percentage-of-completion method. Progress toward completion is measured on a cost-to-cost basis. Sheridan began work on a contract at the beginning of 2023. Data for 2023 follow: Contract price $1,920,000 Estimated costs: Labour $408,000 Materials and subcontracts 840,000 Indirect costs 192,000 1,440,000 Estimated gross profit $480,000 At the end of 2023, the following was the actual status of the contract: Progress billings to date $1,070,400 Costs incurred to date: Labour $198,720 Materials and subcontracts 498,240 Indirect costs 72,000 $768,960 Latest forecast of total costs $1,440,000 It should be noted that included in the above costs incurred to date were standard electrical and mechanical materials stored on the job site, but NOT yet installed, costing $48,960. These costs should NOT be considered in the costs incurred to date.
Transcribed Image Text:Sheridan Construction Inc. specializes in the construction of commercial and industrial buildings. The company is experienced in bidding on long-term construction projects of this type, with the typical project lasting from fifteen to twenty-four months. Sheridan uses the percentage-of-completion method. Progress toward completion is measured on a cost-to-cost basis. Sheridan began work on a contract at the beginning of 2023. Data for 2023 follow: Contract price $1,920,000 Estimated costs: Labour $408,000 Materials and subcontracts 840,000 Indirect costs 192,000 1,440,000 Estimated gross profit $480,000 At the end of 2023, the following was the actual status of the contract: Progress billings to date $1,070,400 Costs incurred to date: Labour $198,720 Materials and subcontracts 498,240 Indirect costs 72,000 $768,960 Latest forecast of total costs $1,440,000 It should be noted that included in the above costs incurred to date were standard electrical and mechanical materials stored on the job site, but NOT yet installed, costing $48,960. These costs should NOT be considered in the costs incurred to date.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS