Answered: Using the percentage-of-completion…

Using the percentage-of-completion method, calculate the percentage complete for each year of the contract. (Round answers to O decimal places, eg. 52%)

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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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

Sandhill Enterprises Ltd. has entered into a contract beginning in February 2023 to build two warehouses for Tamarisk Structures Ltd.
The contract is a non-cancellable fixed-price contract for $9.2 million. The following data pertain to the construction period (all figures
in thousands).
Costs for the year
Estimated costs to complete
Progress billings for the year (non-refundable)
Cash collected for the year
(a)
Percent complete
Save for Later
2023
2024 2025
$3,645
4,455
800
4,455 900
3,320
2,925
Using the percentage-of-completion method, calculate the percentage complete for each year of the contract. (Round answers to 0
decimal places, eg. 52%)
2023
-0.
3,880 2,000
3,930 2,345
2024
2025
Attempts: 0 of 1 used Submit Answer
(b)
The parts of this question must be completed in order. This part will be available when you complete the part above.
%
(c1)
The parts of this question must be completed in order. This part will be available when you complete the part above.
(c2)
The parts of this question must be completed in order. This part will be available when you complete the part above.
(d)
The parts of this question must be completed in order. This part will be available when you complete the part above.

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