Question
In: Accounting
Brady Construction Company contracted to build an apartment complex for a price of $5,800,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $5,800,000. Construction began in 2021 and
was completed in 2023. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
| Estimated Costs to Complete | ||||||||||||
| Costs Incurred During Year | (As of the End of the Year) | |||||||||||
| Situation | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | ||||||
| 1 | 1,580 | 2,370 | 1,140 | 3,510 | 1,140 | — | ||||||
| 2 | 1,580 | 1,140 | 2,720 | 3,510 | 2,720 | — | ||||||
| 3 | 1,580 | 2,370 | 2,240 | 3,510 | 2,140 | — | ||||||
| 4 | 580 | 3,080 | 1,160 | 4,060 | 915 | — | ||||||
| 5 | 580 | 3,080 | 1,860 | 4,060 | 2,140 | — | ||||||
| 6 | 580 | 3,080 | 2,600 | 5,400 | 2,420 | — | ||||||
Required:
Complete the following table. (Do not round intermediate
calculations. Enter answers in dollars. Round your final answers to
the nearest whole dollar. Negative amounts should be indicated by a
minus sign.)
Solutions
Expert Solution
Solution:
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 1) | |||||||||
| 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) | |
| 2021 | $1,580,000 | $1,580,000 | $5,090,000 | 31.04% | $5,800,000 | $1,800,393 | $1,800,393 | $220,393 | |
| 2022 | $2,370,000 | $3,950,000 | $5,090,000 | 77.60% | $5,800,000 | $4,500,982 | $2,700,589 | $330,589 | |
| 2023 | $1,140,000 | $5,090,000 | $5,090,000 | 100.00% | $5,800,000 | $5,800,000 | $1,299,018 | $159,018 | |
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 2) | |||||||||
| 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) | |
| 2021 | $1,580,000 | $1,580,000 | $5,090,000 | 31.04% | $5,800,000 | $1,800,393 | $1,800,393 | $220,393 | |
| 2022 | $1,140,000 | $2,720,000 | $5,440,000 | 50.00% | $5,800,000 | $2,900,000 | $1,099,607 | -$40,393 | |
| 2023 | $2,720,000 | $5,440,000 | $5,440,000 | 100.00% | $5,800,000 | $5,800,000 | $2,900,000 | $180,000 | |
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 3) | |||||||||
| 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) | |
| 2021 | $1,580,000 | $1,580,000 | $5,090,000 | 31.04% | $5,800,000 | $1,800,393 | $1,800,393 | $220,393 | $1,800,393 - $1,580,000 |
| 2022 | $2,370,000 | $3,950,000 | $6,090,000 | 64.86% | $5,800,000 | $3,761,905 | $1,961,512 | -$510,393 | $5,800,000 - $6,090,000 - $220,393 |
| 2023 | $2,240,000 | $6,190,000 | $6,190,000 | 100.00% | $5,800,000 | $5,800,000 | $2,038,095 | -$100,000 | $5,800,000 - $6,190,000 - $220,393 + $510,393 |
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 4) | |||||||||
| 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) | |
| 2021 | $580,000 | $580,000 | $4,640,000 | 12.50% | $5,800,000 | $725,000 | $725,000 | $145,000 | |
| 2022 | $3,080,000 | $3,660,000 | $4,575,000 | 80.00% | $5,800,000 | $4,640,000 | $3,915,000 | $835,000 | |
| 2023 | $1,160,000 | $4,820,000 | $4,820,000 | 100.00% | $5,800,000 | $5,800,000 | $1,160,000 | $0 | |
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 5) | |||||||||
| 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) | |
| 2021 | $580,000 | $580,000 | $4,640,000 | 12.50% | $5,800,000 | $725,000 | $725,000 | $145,000 | |
| 2022 | $3,080,000 | $3,660,000 | $5,800,000 | 63.10% | $5,800,000 | $3,660,000 | $2,935,000 | -$145,000 | |
| 2023 | $1,860,000 | $5,520,000 | $5,520,000 | 100.00% | $5,800,000 | $5,800,000 | $2,140,000 | $280,000 | |
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 6) | |||||||||
| 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) | |
| 2021 | $580,000 | $580,000 | $5,980,000 | 9.70% | $5,800,000 | $562,542 | $562,542 | -$180,000 | $5,800,000 - 5,980,000 |
| 2022 | $3,080,000 | $3,660,000 | $6,080,000 | 60.20% | $5,800,000 | $3,491,447 | $2,928,906 | -$100,000 | $5,800,000 - 6,080,000 + $180,000 |
| 2023 | $2,600,000 | $6,260,000 | $6,260,000 | 100.00% | $5,800,000 | $5,800,000 | $2,308,553 | -$180,000 | $5,800,000 - 6,260,000 + $180,000 + $100,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 1) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2021 | $1,580,000 | $1,580,000 | $5,090,000 | $5,800,000 | $0 |
| 2022 | $2,370,000 | $3,950,000 | $5,090,000 | $5,800,000 | $0 |
| 2023 | $1,140,000 | $5,090,000 | $5,090,000 | $5,800,000 | $710,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 2) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2021 | $1,580,000 | $1,580,000 | $5,090,000 | $5,800,000 | $0 |
| 2022 | $1,140,000 | $2,720,000 | $5,440,000 | $5,800,000 | $0 |
| 2023 | $2,720,000 | $5,440,000 | $5,440,000 | $5,800,000 | $360,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 3) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2021 | $1,580,000 | $1,580,000 | $5,090,000 | $5,800,000 | $0 |
| 2022 | $2,370,000 | $3,950,000 | $6,090,000 | $5,800,000 | -$290,000 |
| 2023 | $2,240,000 | $6,190,000 | $6,190,000 | $5,800,000 | -$100,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 4) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2021 | $580,000 | $580,000 | $4,640,000 | $5,800,000 | $0 |
| 2022 | $3,080,000 | $3,660,000 | $4,575,000 | $5,800,000 | $0 |
| 2023 | $1,160,000 | $4,820,000 | $4,820,000 | $5,800,000 | $980,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 5) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2021 | $580,000 | $580,000 | $4,640,000 | $5,800,000 | $0 |
| 2022 | $3,080,000 | $3,660,000 | $5,800,000 | $5,800,000 | $0 |
| 2023 | $1,860,000 | $5,520,000 | $5,520,000 | $5,800,000 | $280,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 6) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2021 | $580,000 | $580,000 | $5,980,000 | $5,800,000 | -$180,000 |
| 2022 | $3,080,000 | $3,660,000 | $6,080,000 | $5,800,000 | -$100,000 |
| 2023 | $2,600,000 | $6,260,000 | $6,260,000 | $5,800,000 | -$180,000 |
| Gross Profit (Loss) Recognized | ||||||
| Situation | Revenue Recognized over time | Revenue recognized upon completion | ||||
| 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | |
| 1 | $220,393 | $330,589 | $159,018 | $0 | $0 | $710,000 |
| 2 | $220,393 | -$40,393 | $180,000 | $0 | $0 | $360,000 |
| 3 | $220,393 | -$510,393 | -$100,000 | $0 | -$290,000 | -$100,000 |
| 4 | $145,000 | $835,000 | $0 | $0 | $0 | $980,000 |
| 5 | $145,000 | -$145,000 | $280,000 | $0 | $0 | $280,000 |
| 6 | -$180,000 | -$100,000 | -$180,000 | -$180,000 | -$100,000 | -$180,000 |
ekkarill92 answered 2 years agoRelated Solutions
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Brady Construction Company contracted to build an apartment complex for a price of $5,200,000. Construction began...
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situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
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Brady Construction Company contracted to build an apartment complex for a price of $5,200,000. Construction began...
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was completed in 2023. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars. Estimated
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situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
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complex for a price of $6,400,000. Construction began in 2018 and
was completed in 2020. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2018
2019
2020
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2020
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