Question

Beavis Construction Company was the low bidder on a construction project to build an earthen dam for $1,760,000. The project was begun in 2015 and completed in 2016. Cost and other data are presented below:

	2015	2016
Costs incurred during the year	$ 399,000	$1,060,000
Estimated costs to complete	931,000	0
Billings during the year	485,000	1,330,000
Cash collections during the year	385,000	1,430,000

Required information

Assume that Beavis recognizes revenue on this contract over time according to percentage of completion.

Required:

Compute the amount of gross profit recognized during 2015 and 2016.

13.Required information

Assume that Beavis recognizes revenue on this contract over time according to percentage of completion.

Required:

Prepare all journal entries to record costs, billings, collections, and profit recognition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

14.Required information

Assume that Beavis recognizes revenue upon completion of the project.

Required:

Compute the amount of gross profit recognized during 2015 and 2016.

  

15.Required information

Assume that Beavis recognizes revenue upon completion of the project.

Required:

Prepare all journal entries to record costs, billings, collections, and profit recognition.

Answer 1

ans1) the amount of gross profit recognized during 2015 and 2016. 2015 Contract price $ 1760000 Actual costs to date $ 399000 Estimated costs to complete 931000 Total estimated project costs 1330000 Estimated total gross proft 430000 Percentage oF completion: $399000/1330000 30% Gross proft recognized $129000 2016: Contract price $1,760000 Costs incurred:2015 $399000 2016 1,060,000 Total cost 1,459,000 Total gross proft 301000 Recognized in 2015 129000 Recognized in 2016 $172,000 ans2) all journal entries to record costs, billings, collections, and profit recognition. 2015: Construction in progress 399000 Cash or A/P 399000 Accounts receivable 485000 Billings on construction contract 485000 Cash 385000 Accounts receivable 385000 Construction in progress 129000 Cost of construction 399000 Revenue from long-term contracts 528000 2016: Construction in progress 1,060,000 Cash or A/P 1,060,000 Accounts receivable 1,330,000 Billings on construction receivable 1,330,000 Cash 1430000 Account REceivables 1430000 Construction in progress 172000 Cost of construction 1060000 Revenuefrom long-term contracts 1232000 Billings on construction contract 1760000 Construction in progress 1760000 ans3) mount of gross profit recognized during 2015 and 2016. 2015:$0 2016: Contract price 1760000 Costs incurred: 2015 399000 2016 1060000 Total cost 1459000 Total gross profit 301000 ans4) all entries to record costs, billings, collections, and profit recognition. 2015: Construction in progress 399000 Cash or A/P 399000 Accounts receivable 485000 Billings on construction contract 485000 Cash 385000 Accounts receivable 385000 2016: Construction in progress 1060000 Cash or A/P 1060000 Accounts receivable 1330000 Billings on construction contract 1330000 Cash 1430000 Accounts receivable 1430000 Construction in progress 301000 Cost of construction 1459000 Revenue from long-term contracts 1760000 Billings on construction contract 1760000 Construction in progress 1760000