Question
In: Accounting
On May 1, 2020, Jackson Construction Company contracted to construct a factory building for a total...
On May 1, 2020, Jackson Construction Company contracted to construct a factory building for a total contract price of $9,600,000. The building was completed by May 31,2022. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2020, 2021, and 2022 are given below.
2020 2021 2022
Contract costs incurred during the year $3,400,000 $2,400,000 $2,900,000
Estimated costs to complete the contract at Dec 31 4,600,000 3,100,000 -0-
Billings 1,200,000 4,100,000 4,300,000
"(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, 2020, 2021, and 2022. (Ignore income taxes.)
(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, 2020, 2021, and 2022. (Ignore incomes taxes.)"
Solutions
ekkarill92 answered 1 year agoRelated Solutions
MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 2019 and...
MSK Construction Company contracted to construct a factory
building for $525,000. Construction started during 2019 and was
completed in 2020. Information relating to the contract
follows:
2019
2020
Costs incurred during the
year
$
290,000
$
150,000
Estimated additional cost to
complete
145,000
—
Billings during the year
260,000
265,000
Cash collections during the
year
240,000
285,000
Required:
Record the preceding transactions in MSK’s books assuming it
recognizes revenue over time and uses costs incurred to measure the
extent to...
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...
On March 1, 2017, Shamrock Construction Company contracted to construct a factory building for Fabrik Manufacturing...
On March 1, 2017, Shamrock Construction Company contracted to
construct a factory building for Fabrik Manufacturing Inc. for a
total contract price of $8,390,000. 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 $3,003,300 $2,179,700 $2,117,000
Estimated costs to complete the contract at 12/31 3,386,700
2,117,000 –0– Billings...
On March 1, 2017, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing...
On March 1, 2017, Pechstein Construction Company contracted to
construct a factory building for Fabrik Manufacturing Inc. for a
total contract price of $8,400,000. 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
$2,208,000
$2,230,000
$2,190,000
Estimated Costs to Complete the Contract at 12/31
$3,520,000
$2,190,000
-0-
Billings...
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 $8,410,000. 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
$2,916,400
$2,079,200
$2,244,400
Estimated costs to complete the contract at 12/31
3,423,600
2,244,400
–0–
Billings...
Problem 18-10 On March 1, 2017, Sandhill Construction Company contracted to construct a factory building for...
Problem 18-10
On March 1, 2017, Sandhill Construction Company contracted to
construct a factory building for Fabrik Manufacturing Inc. for a
total contract price of $8,310,000. 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
$2,871,000
$2,304,900
$2,114,100 (2019 Row)
Estimated costs to complete the contract at 12/31...
The Ugenti Construction Company contracted to construct a warehouse building for $2,600,000. Construction began in 2016...
The Ugenti Construction Company contracted to construct a
warehouse building for $2,600,000. Construction began in 2016 and
was completed in 2017. Data relating to the contract are summarized
below:
2016
2017
Costs incurred during the
year................. $
360,000
$1,650,000
Estimated costs to complete as of
12/31.
1,560,000
-
Billings during the year
..........................
430,000
2,170,000
Cash collections during the
year..............
320,000
2,280,000
Required:
1. Compute the amount of
gross...
Thrasher Construction Co. was contracted to construct a building for $975,000. The building is owned by...
Thrasher Construction Co. was contracted to construct a building
for $975,000. The building is owned by the customer throughout the
contract period. The contract provides for progress payments.
Thrasher’s accounting year ends 31 December. Work began under the
contract on 1 July 20X5, and was completed on 30 September 20X7.
Construction activities are summarized below by year:
20X5 Construction costs incurred during the year, $180,000;
estimated costs to complete, $630,000; progress billings during the
year, $153,000; and collections, $140,000. 20X6...
In January 2010, Construction Corp. contracted to construct a building for $ 6,000,000. Construction started in...
In January 2010, Construction Corp. contracted to construct a
building for $ 6,000,000. Construction started in early 2010 and
was completed in 2011. The following additional information is
available:
2010
2011
Costs
incurred.............................................................
$
2,430,000
$ 2,700,000
Estimated costs to
complete.............................................
2,600,000
—
Collections during the
year..............................................
2,400,000
3,600,000
Billings for
the year …………………………………………..
2,800,000
3,200,000
Used the percentage-of-completion method.
Instructions
Under the contract-based approach,
a) How much revenue
should be reported...
On June 1, 2020, Roman Construction Company Inc. contracted to build an office building for Sicily...
On June 1, 2020, Roman Construction Company Inc. contracted to
build an office building for Sicily Corp. for a total contract
price of $2,600,000. On July 1, Roman estimated that it would take
between 2 and 3 years to complete the building. On December 31,
2022, the building was deemed substantially completed. Following
are accumulated contract costs incurred, estimated costs to
complete the contract, and accumulated billings to Sicily 2020,
2021, and 2022:
At
At
At
12/31/2020
12/31/2021
12/31/2022
Contract...
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