SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: December 31, 2021 December 31, 2022 Percentage of completion 30% 82.5% Estimated cost to complete 1,960,000 840,000 1. What is the total cost incurred in year 2022? С. 1,680,000 A. 4,073,750 B. 840,000 D. 3,120,000 2. The realized gross profit (loss) in year 2022 is A. 650,000 В. 405,000 C. (. 245,000) D. (1,055,000) 3. What is the construction cost of sales for year 2022? С. 3,233,750 D. 4,478,750 A. 3,960,000 В. 3,120,000 4. What is the construction-in-progress as of 2022? С. 2,065,000 D. 2,470,000 А. 3,423,750 В. 3,310,000

SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: December 31, 2021 December 31, 2022 Percentage of completion 30% 82.5% Estimated cost to complete 1,960,000 840,000 1. What is the total cost incurred in year 2022? С. 1,680,000 A. 4,073,750 B. 840,000 D. 3,120,000 2. The realized gross profit (loss) in year 2022 is A. 650,000 В. 405,000 C. (. 245,000) D. (1,055,000) 3. What is the construction cost of sales for year 2022? С. 3,233,750 D. 4,478,750 A. 3,960,000 В. 3,120,000 4. What is the construction-in-progress as of 2022? С. 2,065,000 D. 2,470,000 А. 3,423,750 В. 3,310,000

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: A&B Construction enters into a contract to construct a bridge for $1,400,000. At the outset, A&B…

A: Lets understand the basics.In completed contract method, profit gets recorded at the end of 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: Arab Construction Company began work in 2021 on contract XXXX, which provided for a contract price…

A: Lets understand the basics.In percentage of completion method, revenue get recognized based on the…

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: Construction costs: 2020: $100,000 2021: $186,000 2022: $214,000 Estimated Costs to Complete: 2020:…

A: Total construction costs = $100000 + $186000 + $214000 =…

Q: Blossom Construction, which follows ASPE entered into a contract to construct a bridge for a…

A: The completed contract method is an accounting method used to recognize revenue and expenses for…

Q: Duke Ltd has a contract with a customer ongoing at the end of the financial year, 31 December 2020.…

A: The percentage of completion method reports revenues and expenses in terms of the work completed to…

Q: Martinez Furniture started construction of a combination office and warehouse building for its own…

A: Long term debt is that kind of debt which is presented differently from short term debt and also…

Q: ABC Co. entered into a long-term construction contract for 3 years. Contract price agreed was…

A: When the outcome of a construction contract can be estimated reliably, contract revenue and contract…

Q: 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa…

A: To calculate the amount of revenue and gross profit (loss) to be recognized in each of the three…

Q: In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa…

A: "Since you have asked a question with sub-parts more than three, as per guidelines, the first three…

Q: ZEN Ltd signs a contract on 30 June 2019, agreeing to build a bridge for XYN at a contract price of…

A: Cost(an input measure) method:- In this approach, the percentage of completion is based on the costs…

Q: The contract is a non-cancellable fixed-price contract for $10 million. The following data pertain…

A: Infrastructure assembly or building is called construction. This can include roads, bridges,…

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: a) Using percentage-of-completion method, prepare schedules to compute the profit and loss to be…

A: The amount earned from the business operation is known as operating income, but when the expenses to…

Q: In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa…

A: Part 2: ExplanationStep 1: Calculate the percentage of completion for each year using the formula:\[…

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

A: The percentage of completion method determines the estimated amount of revenue earned with respect…

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: In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa…

A: Gross profit refers to a company's earnings after deducting the costs of producing and selling its…

Q: Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,860,000.…

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

Q: In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa…

A: In contract costing the percentage of completion method is used and the revenue is recognized by…

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

100%

SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The
outcome of the contract was estimated reliably. The following data were ascertained for the contract:
December 31, 2021
December 31, 2022
Percentage of completion
30%
82.5%
Estimated cost to complete
1,960,000
840,000
1. What is the total cost incurred in year 2022?
С. 1,680,000
D. 3,120,000
A. 4,073,750
В.
840,000
2. The realized gross profit (loss) in year 2022 is
A. 650,000
B. 405,000
C. (. 245,000)
D. (1,055,000)
3. What is the construction cost of sales for year 2022?
С. 3,233,750
D. 4,478,750
A. 3,960,000
В. 3,120,000
4. What is the construction-in-progress as of 2022?
А. 3,423,750
C. 2,065,000
В. 3,310,000
D. 2,470,000

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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

Assume Avaya contracted to provide a customer with Internet infrastructure for $2,200,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: 2024 2025 Costs incurred during the year $ 316,000 $ 1,700,000 Estimated costs to complete as of 12/31 1,264,000 0 Billings during the year 400,000 1,660,000 Cash collections during the year 290,000 1,770,000 Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming this project does not qualify for revenue recognition over time.
Chung Corp. thought of constructing their own building for P40,000,000 which they plan to start and finish until December 31, 2021. Chung made the following payments, based on the construction contract, during 2021.· January 31- P5,000,000· February 28- P8,000,000· July 1- P15,000,000· August 31- P10,000,000· November 30- P2,000,000Chung secured a 10%, 4-year noted dated January 1, 2021, specifically intended for the construction. The amount was P20,000,000.Also, the entity had other debts outstanding as follows:· 8%, 6-year note dated December 31, 2019- P18,000,000· 12%, 7-year noted dated December 31, 2018 - P22,000,000 What is the total cost of the building constructed?
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…
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,100,000 $ 2,450,000 $ 2,695,000 Estimated costs to complete as of year-end 4,900,000 2,450,000 0 Billings during the year 2,200,000 2,350,000 5,450,000 Cash collections during the year 1,900,000 2,300,000 5,800,000 Westgate recognizes revenue over time according to percentage of completion. 2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred).2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs incurred).2-c. In the journal below, complete the necessary journal entries for the year 2023…
Assume that Cullumber Construction Company has a non-cancellable contract to construct a $4,600,000 bridge at an estimated cost of $4,140,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. Assume that progress billings are non-refundable. 2023 2024 2025 Costs to date (12/31) $1,076,400 $2,980,800 $4,657,500 Estimated costs to complete (12/31) 3,063,600 1,676,700 Progress billings during the year 957,000 2,422,000 1.221,000 Cash collected during the year 774,000 1,881,000 1,945,000 The revised estimates for the bridge contract are as follows. 2023 Original Estimates 2024 Revised Estimates Contract price $4,600,000 $4,600,000 Estimated total cost 4,140,000 4,657,500* Estimated gross profit $460,000 Estimated loss $(57,500) *$2,980,800+ $1,676,700 (a1) * Your answer is incorrect. Under the percentage-of-completion method, calculate the total loss in 2024. Total loss in 2024 $ LA 156400
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: 2025 Cost incurred during the year. Estimated costs to complete as of year-end Billings during the year 2024 $ 2,059,000 5,041,000 2,190,000 $ 2,627,000 2,414,000 2,496,000 2026 $ 2,655,400 0 5,314,000 Cash collections during the year 1,895,000 2,400,000 5,705,000 Westgate recognizes revenue over time according to percentage of completion. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. Note: Do not round intermediate calculations. Loss amounts should be indicated with a minus sign. Revenue Gross profit (loss) 2024 2025 2026
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $ 10,000,000. The road was completed in 2026. Information related to the contract is as follows: 2024 2025 2026 Cost incurred during the year $ 2,184,000 $3,510,000 $2,316, 600 Estimated costs to complete as of year-end 5,616,000 2,106, 000 0 Billings during the year 1,800,000 3,894,000 4,306, 000 Cash collections during the year 1,600,000 3,400,000 5,000,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. 2-a. In the journal below, complete the necessary journal entries for the year 2024 (credit" Cash, Materials, etc." for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2025 (credit "Cash, Materials, etc." for construction costs…