In: Accounting
Ex. 18-134—Percentage-of-completion method. Penner Builders contracted to build a high-rise for €35,000,000. Construction began in 2018 and is expected to be completed in 2020. Data for 2018 and 2019 are:
2018 2019
costs incurred to date 4.5M 13M
Estimated cost to complete 18M. 12M
Penner uses the percentage-of-completion method.
Instructions
A: How much gross profit should be reported for 2018? Show your computation.
B: How much gross profit should be reported for 2019?
C: Make the journal Entry to record the revenue and gross profit for 2019
A | 2018 | ||
percentage completion method | cost incurred till date | ||
estimated total cost | |||
25% | |||
Revenue to be recognised | € 8.75 | million | |
Cost incurred | € 4.50 | ||
Gross Profit | € 4.25 | million | |
B | 2019 | ||
percentage completion method | cost incurred till date | ||
estimated total cost | |||
52% | |||
Revenue to be recognised | € 18.20 | ||
Cost incurred | € 13.00 | ||
Gross Profit | € 5.20 | million | |
C | |||
Construction Exp Dr | € 8.50 | million | |
CWIP DR | € 0.95 | million | |
To Construction Revenue | € 9.45 | million |
I hope my workings are enough to undertstand |
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