Question

***PLEASE SHOW WORK***

% of Completion

On May 1, 2013, Chapin Construction Company entered into a $4,000,000 fixed-price contract to build an apartment building.Expected completion date is November, 2014.Assume a zero balance in the cash account as of 5/1/2013.

Please fill in Journal Entries and the Financial Statements below.Data pertaining to the construction period are as follows:

	2013	2014	2015	Total
Contract price				4,000,000
Costs incurred to date	800,000	2,550,000	3,500,000
Estimated costs to complete	2,400,000	850,000	-
Progress Billings during year	850,000	2,100,000	1,050,000	4,000,000
Collections during year	700,000	2,000,000	1,300,000	4,000,000

PART 1

2013 2014 2015
% Complete
Rev. Recog
GP Recog PART 2 Journal Entries 2013 2014 2015 CIP Cash,Mtls, A/P, etc. A/R Billings Cash A/R Billings Revenue Construction Expense CIP PART 3 Balance Sheet: Current Assets A/R Costs &GP in Excess of Billings Current Liabilities Billings in Excess of Costs & GP Income Statement Revenue from Contract Construction Expense Gross Profit on Contract

Answer 1

• All working forms part of the answer
• Working---

	2013	2014	2015
Contract Price	$    4,000,000.00	$ 4,000,000.00	$    4,000,000.00
Cost Incurred to Date	$        800,000.00	$ 2,550,000.00	$    3,500,000.00
Estimated cost yet to be incurred to complete the contract	$    2,400,000.00	$      850,000.00	$                          -
Total Cost	$    3,200,000.00	$ 3,400,000.00	$    3,500,000.00
% of Completion	25.00%	75.00%	100.00%
Revenue to date	$    1,000,000.00	$ 3,000,000.00	$    4,000,000.00
Revenue of Previous year	$                          -	$ 1,000,000.00	$    3,000,000.00
Net Revenue this year	$    1,000,000.00	$ 2,000,000.00	$    1,000,000.00
Cost to date	$        800,000.00	$ 2,550,000.00	$    3,500,000.00
Cost to date of previous year	$                          -	$      800,000.00	$    2,550,000.00
Net Cost for the year	$        800,000.00	$ 1,750,000.00	$        950,000.00
Gross Profits	$        200,000.00	$      250,000.00	$          50,000.00

• Answers

	2013	2014	2015
% Complete	25.00%	75.00%	100.00%
Rev. Recog	$    1,000,000.00	$ 2,000,000.00	$    1,000,000.00
GP Recog	$        200,000.00	$      250,000.00	$          50,000.00
Journal Entries	2013	2014	2015
CIP	$        800,000.00	$ 1,750,000.00	$        950,000.00
Cash,Mtls, A/P, etc.	$        800,000.00	$ 1,750,000.00	$        950,000.00
A/R	$        850,000.00	$ 2,100,000.00	$    1,050,000.00
Billings	$        850,000.00	$ 2,100,000.00	$    1,050,000.00
Cash	$        700,000.00	$ 2,000,000.00	$    1,300,000.00
A/R	$        700,000.00	$ 2,000,000.00	$    1,300,000.00
Billings	$        850,000.00	$ 2,100,000.00	$    1,050,000.00
Revenue	$        850,000.00	$ 2,100,000.00	$    1,050,000.00
Construction Expense	$        800,000.00	$ 1,750,000.00	$        950,000.00
CIP	$        200,000.00	$      250,000.00	$          50,000.00
Revenue	$    1,000,000.00	$ 2,000,000.00	$    1,000,000.00
Balance Sheet:	2013	2014	2015
Current Assets
A/R	$        150,000.00	$      250,000.00	$                          -
Costs &GP in Excess of Billings	$                          -	$                        -	$                          -
Current Liabilities
Billings in Excess of Costs & GP	$          50,000.00	$      350,000.00	$                          -
Income Statement	2013	2014	2015
Revenue from Contract	$    1,000,000.00	$ 2,000,000.00	$    1,000,000.00
Construction Expense	$        800,000.00	$ 1,750,000.00	$        950,000.00
Gross Profit on Contract	$        200,000.00	$      250,000.00	$          50,000.00