Question

A construction company entered into a fixed-price contract to build an office building for $38 million. Construction costs incurred during the first year were $12 million and estimated costs to complete at the end of the year were $18 million. During the first year the company billed its customer $14 million, of which $7 million was collected before year-end.

What would appear in the year-end balance sheet related to this contract using the percentage-of-completion method? (Enter your answers in whole dollars.)

Answer 1

Following amount will show in the Balance sheet:

Assets:
Billed Accounts Receivable	7,000,000
Unbilled Receivable	1,200,000

Workings:

Billed	14,000,000
Received	7,000,000
Accounts Receivable	7,000,000

Cost Incurred Till Date	12,000,000
Estimated Cost	18,000,000
Total Cost	30,000,000
% of completion (12/30)	40%
Contract Value	38,000,000
Total Cost	30,000,000
Total Gross Profit	8,000,000
Gross Profit- Current Year	3,200,000
Revenue-Current Year(12+3.2)	15,200,000
Billed	14,000,000
Unbilled Receivable	1,200,000

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