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On July 1, 2017, Sheridan Construction Company Inc. contracted to build an office building for Gumbel...

On July 1, 2017, Sheridan Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,880,000. On July 1, Sheridan estimated that it would take between 2 and 3 years to complete the building. On December 31, 2019, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2017, 2018, and 2019.

At
12/31/17
At
12/31/18
At
12/31/19
Contract costs incurred to date $298,000 $1,194,000 $2,098,500
Estimated costs to complete the contract 1,192,000 796,000 –0–
Billings to Gumbel 300,000 1,100,000 1,820,000


(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 field blank.)

2017
[Entry field with correct answer]

Costs to date (12/31/17)
Estimated Total Costs
Percent Complete
Revenue Recognized
Profit / (Loss) Recognized in 2017
Estimated Costs to Complete
$
[Entry field with correct answer]
[Entry field with correct answer]

Costs to date (12/31/17)
Revenue Recognized
Estimated Costs to Complete
Profit / (Loss) Recognized in 2017
Estimated Total Costs
Percent Complete
[Entry field with correct answer]

[Entry field with correct answer]
    
    Revenue Recognized
    Percent Complete
    Profit / (Loss) Recognized in 2017
    Costs to date (12/31/17)
    Estimated Costs to Complete
    Estimated Total Costs
$
[Entry field with correct answer]

[Entry field with correct answer]

Profit / (Loss) Recognized in 2017
Percent Complete
Costs to date (12/31/17)
Estimated Total Costs
Estimated Costs to Complete
Revenue Recognized
[Entry field with correct answer]
%

[Entry field with correct answer]

Estimated Total Costs
Percent Complete
Revenue Recognized
Estimated Costs to Complete
Costs Incurred
Profit / (Loss) Recognized in 2017
$
[Entry field with correct answer]
[Entry field with correct answer]

Estimated Costs to Complete
Revenue Recognized
Percent Complete
Costs Incurred
Profit / (Loss) Recognized in 2017
Estimated Total Costs
[Entry field with correct answer]

[Entry field with correct answer]

Estimated Total Costs
Costs Incurred
Percent Complete
Profit / (Loss) Recognized in 2017
Estimated Costs to Complete
Revenue Recognized
$
[Entry field with correct answer]

2018
[Entry field with correct answer]

Estimated Total Costs
Total Profit/Loss
Contract Price
Costs to date (12/31/18)
Estimated Costs to Complete
Gross Profit Recognized in 2017
Profit / (Loss) Recognized in 2018
Profit/Loss Recognized in 2017
$
[Entry field with correct answer]
[Entry field with correct answer]

Gross Profit Recognized in 2017
Contract Price
Estimated Total Costs
Profit/Loss Recognized in 2017
Profit / (Loss) Recognized in 2018
Total Profit/Loss
Costs to date (12/31/18)
Estimated Costs to Complete
[Entry field with correct answer]
[Entry field with correct answer]
    
    Profit/Loss Recognized in 2017
    Profit / (Loss) Recognized in 2018
    Estimated Total Costs
    Costs to date (12/31/18)
    Gross Profit Recognized in 2017
    Estimated Costs to Complete
    Contract Price
    Total Profit/Loss
[Entry field with correct answer]
[Entry field with incorrect answer]
    
Profit / (Loss) Recognized in 2018    
Gross Profit Recognized in 2017    
Profit/Loss Recognized in 2017    
Costs to date (12/31/18)    
Estimated Costs to Complete    
Estimated Total Costs    
Contract Price    
Total Profit/Loss    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
    
Contract Price    
Total Profit/Loss    
Costs to date (12/31/18)    
Estimated Costs to Complete    
Profit/Loss Recognized in 2017    
Gross Profit Recognized in 2017    
Estimated Total Costs    
Profit / (Loss) Recognized in 2018    
$
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Total Profit/Loss
Costs to date (12/31/18)
Profit / (Loss) Recognized in 2018
Contract Price
Gross Profit Recognized in 2017
Estimated Costs to Complete
Estimated Total Costs
Profit/Loss Recognized in 2017
$
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Add
Less
:
[Entry field with incorrect answer]

Estimated Total Costs
Contract Price
Estimated Costs to Complete
Total Profit/Loss
Profit/Loss Recognized in 2017
Profit / (Loss) Recognized in 2018
Gross Profit Recognized in 2017
Costs to date (12/31/18)
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Gross Profit Recognized in 2017
Estimated Total Costs
Total Profit/Loss
Contract Price
Estimated Costs to Complete
Profit/Loss Recognized in 2017
Profit / (Loss) Recognized in 2018
Costs to date (12/31/18)
$
[Entry field with incorrect answer]

2019
[Entry field with incorrect answer]

Contract Price
Costs to date (12/31/19)
Gross Profit Recognized in 2018
Total Profit/Loss
Profit/Loss Recognized in 2017
Profit/Loss Recognized in 2018
Gross Profit Recognized in 2017
Profit / (Loss) Recognized in 2019
Estimated Costs to Complete
Estimated Total Costs
$
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Gross Profit Recognized in 2018
Estimated Total Costs
Total Profit/Loss
Estimated Costs to Complete
Profit / (Loss) Recognized in 2019
Costs to date (12/31/19)
Profit/Loss Recognized in 2018
Gross Profit Recognized in 2017
Contract Price
Profit/Loss Recognized in 2017
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Total Profit/Loss
Profit / (Loss) Recognized in 2019
Profit/Loss Recognized in 2017
Costs to date (12/31/19)
Profit/Loss Recognized in 2018
Gross Profit Recognized in 2017
Estimated Costs to Complete
Estimated Total Costs
Gross Profit Recognized in 2018
Contract Price
[Entry field with incorrect answer]
[Entry field with incorrect answer]
    
Costs to date (12/31/19)    
Contract Price    
Profit/Loss Recognized in 2017    
Profit/Loss Recognized in 2018    
Total Profit/Loss    
Gross Profit Recognized in 2018    
Profit / (Loss) Recognized in 2019    
Gross Profit Recognized in 2017    
Estimated Costs to Complete    
Estimated Total Costs    
$
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Contract Price
Total Profit/Loss
Profit/Loss Recognized in 2018
Gross Profit Recognized in 2017
Profit / (Loss) Recognized in 2019
Estimated Costs to Complete
Gross Profit Recognized in 2018
Costs to date (12/31/19)
Profit/Loss Recognized in 2017
Estimated Total Costs
$
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Add
Less
:
[Entry field with incorrect answer]

Gross Profit Recognized in 2018
Gross Profit Recognized in 2017
Profit / (Loss) Recognized in 2019
Estimated Total Costs
Costs to date (12/31/19)
Profit/Loss Recognized in 2017
Profit/Loss Recognized in 2018
Contract Price
Total Profit/Loss
Estimated Costs to Complete
$
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Costs to date (12/31/19)
Estimated Total Costs
Profit/Loss Recognized in 2018
Profit / (Loss) Recognized in 2019
Estimated Costs to Complete
Contract Price
Total Profit/Loss
Gross Profit Recognized in 2017
Profit/Loss Recognized in 2017
Gross Profit Recognized in 2018
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with incorrect answer]
    
Total Profit/Loss    
Contract Price    
Profit/Loss Recognized in 2017    
Estimated Total Costs    
Gross Profit Recognized in 2017    
Gross Profit Recognized in 2018    
Profit/Loss Recognized in 2018    
Profit / (Loss) Recognized in 2019    
Costs to date (12/31/19)    
Estimated Costs to Complete    
$
[Entry field with incorrect answer]


(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.)

2018
[Entry field with incorrect answer]

Estimated Total Costs
Estimated Costs to Complete
Profit / (Loss) Recognized in 2018
Costs to date (12/31/18)
Contract Price
$
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Estimated Costs to Complete
Estimated Total Costs
Contract Price
Profit / (Loss) Recognized in 2018
Costs to date (12/31/18)
[Entry field with incorrect answer]
[Entry field with incorrect answer]
    
Estimated Costs to Complete    
Estimated Total Costs    
Contract Price    
Profit / (Loss) Recognized in 2018    
Costs to date (12/31/18)    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
    
Estimated Total Costs    
Contract Price    
Costs to date (12/31/18)    
Estimated Costs to Complete    
Profit / (Loss) Recognized in 2018    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
    
Estimated Costs to Complete    
Costs to date (12/31/18)    
Contract Price    
Estimated Total Costs    
Profit / (Loss) Recognized in 2018    
$
[Entry field with incorrect answer]

2019
[Entry field with incorrect answer]

Costs Incurred
Contract Price
Profit / (Loss) Recognized in 2018
Total Profit / (Loss) on Contract
Profit / (Loss) Recognized in 2019
$
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Profit / (Loss) Recognized in 2018
Profit / (Loss) Recognized in 2019
Contract Price
Costs Incurred
Total Profit / (Loss) on Contract
[Entry field with incorrect answer]
[Entry field with incorrect answer]
    
Total Profit / (Loss) on Contract    
Profit / (Loss) Recognized in 2019    
Profit / (Loss) Recognized in 2018    
Costs Incurred    
Contract Price    
[Entry field with incorrect answer]
[Entry field with incorrect answer]
    
Less    
Add    
:
[Entry field with incorrect answer]

Profit / (Loss) Recognized in 2019
Contract Price
Costs Incurred
Total Profit / (Loss) on Contract
Profit / (Loss) Recognized in 2018
[Entry field with incorrect answer]
[Entry field with incorrect answer]
    
Costs Incurred    
Contract Price    
Profit / (Loss) Recognized in 2019    
Total Profit / (Loss) on Contract    
Profit / (Loss) Recognized in 2018    
$
[Entry field with incorrect answer now contains modified data]

Solutions

Expert Solution

(a)                                       Percentage-of-Completion Method
2017
        Costs up to 12/31/17...........................................................              $   298,000
        Estimated costs for completetion.........................................              1,192,000
                Estimated total costs....................................................              $1,4,90,000
        Percentage completed ($298,000/$1,490,000).....................                          20%
        Revenue to be recognized ($1,880,000*20%).......................              $   376000
        Costs incurred......................................................................                  ($298000)
        Profit to be recognized in 2017............................................              $     78000
2018
        Costs to date (12/31/18).......................................................              $1,1,94,000
        Estimated costs to complete.................................................                   796,000
                Estimated total costs....................................................                 $1990000
        Contract price......................................................................              (1,880,000)
        Total loss.............................................................................              $   110,000
        Total loss.............................................................................              $   110,000
        Plus gross profit recognized in 2017....................................                     78,000
        Loss recognized in 2018.......................................................              $   188,000
                                                                     
2019
        Costs to date (12/31/19)..............................................                       $2,098,500
        Estimated costs to complete........................................                                       0
                                                                                                                                 2,098,500
        Contract price.............................................................                       1,880,000
        Total loss....................................................................                       $ (218,500)
        Total loss....................................................................                       $ (218,500)
        Less: Loss recognized in 2018....................................    $188000
        Gross profit recognized in 2017..................................       (78,000)       (110,000)
        Loss recognized in 2019..............................................                         $ (108,500)
(b)                                           Completed-Contract Method
        2017—No revenue or profit is reognized
2018
        Costs to date (12/31/18)...............................................                     $1,194,000
        Estimated costs to complete.........................................                          796,000
                 Estimated total costs............................................                       $1990000
        Contract price...............................................................                     1,880,000
        Loss recognized in 2018...............................................                     $ (1100,000)
2019
        Total costs incurred till 12/31/19..................................                     $2,098,500
        Total revenue recognized..............................................                     1,880000
                 Total loss on contract...........................................                         (218500)
        Less: loss recognized in 2018........................................                         (110,000)
        Loss recognized in 2019................................................                       $ (108500)

ekkarill92 answered 1 year ago
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