Question

Kingbird Construction Company has entered into a contract beginning January 1, 2017, to build a parking complex. It has been estimated that the complex will cost $594,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $896,000. The following data pertain to the construction period.

		2017		2018		2019
Costs to date		$267,300		$463,320		$606,000
Estimated costs to complete		326,700		130,680		–0–
Progress billings to date		268,000		547,000		896,000
Cash collected to date		238,000		497,000		896,000

(a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter 0. Do not leave any fields blank.)

(b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter 0. Do not leave any fields blank.)

please show work!!

Answer 1

a	2017	2018	2019
Contract Price	896,000	896,000	896,000
Less Estimated Cost:
Cost to date	267,300	463,320	606,000
Estimated cost to complete	326,700	130,680	-
Estimated total Cost	594,000	594,000	606,000
Estimated total gross profit	302,000	302,000	290,000
Gross profit recognized in-
Cost to date / Estimated total Cost *Estimated total gross profit	135,900	235,560	290,000
Less:Recognised in PY	-	135,900	235,560
GP to be recognised in CY	135,900	99,660	54,440

b
Total Billing	896,000
Total Cost	606,000
Gross profit to be recognised in 2019	290,000

No Gross profit is recognised in 2017 and 2018