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In: Accounting
On March 1, 2017, Oriole Construction Company contracted to construct a factory building for Fabrik Manufacturing...
On March 1, 2017, Oriole Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,450,000. The building was completed by October 31, 2019. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2017, 2018, and 2019 are given below: 2017 2018 2019 Contract costs incurred during the year $3,052,800 $2,254,300 $1,962,900 Estimated costs to complete the contract at 12/31 3,307,200 1,962,900 –0– Billings to Fabrik during the year 3,230,000 3,470,000 1,750,000 (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any fields blank.) 2017 $ $ % $ $ 2018 $ $ % $ $ 2019 $ : $ (b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any fields blank. Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 2017 $ 2018 $ 2019 $
Solutions
Expert Solution
Solution a:
| Computation of % of completion, revenue recognition and Gross Profit - Oriole Construction Company | ||||||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) | Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) (G - A) |
| 2017 | $3,052,800 | $3,052,800 | $6,360,000 | 48.00% | $8,450,000 | $4,056,000 | $4,056,000 | $1,003,200 |
| 2018 | $2,254,300 | $5,307,100 | $7,270,000 | 73.00% | $8,450,000 | $6,168,500 | $2,112,500 | -$141,800 |
| 2019 | $1,962,900 | $7,270,000 | $7,270,000 | 100.00% | $8,450,000 | $8,450,000 | $2,281,500 | $318,600 |
Solution b:
| Computation of Gross Profit - Revenue on completion - Oriole Construction Company | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | Contract Price (D) |
Gross Profit |
| 2017 | $3,052,800 | $3,052,800 | $6,360,000 | $8,450,000 | $0 |
| 2018 | $2,254,300 | $5,307,100 | $7,270,000 | $8,450,000 | $0 |
| 2019 | $1,962,900 | $7,270,000 | $7,270,000 | $8,450,000 | $1,180,000 |
ekkarill92 answered 2 years agoRelated Solutions
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