Question

In: Accounting

During 2020, Riverbed Company started a construction job with a contract price of $1,610,000. The job...

During 2020, Riverbed Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. T

he following information is available. 2020 2021 2022

Costs incurred to date $383,800 $905,280 $1,063,000

Estimated costs to complete 626,200 198,720 –0–

Billings to date 302,000 896,000 1,610,000

Collections to date 271,000 817,000 1,419,000

Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.

Gross profit recognized in 2020

$

Gross profit recognized in 2021

$

Gross profit recognized in 2022

$

Prepare all necessary journal entries for 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For costs incurred use account Materials, Cash, Payables.)

(To record cost of construction.)

(To record progress billings.)

(To record collections.)

(To recognize revenue.)


Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.
Gross profit 2020? 2021? 2022?

Solutions

Expert Solution

a)

2020 2021 2022
cost incurred till date 383800 905280 1063000
Estimated costs to complete 626200 198720 0
Total cost to complete 1010000 1104000 1063000
% of completion till date [cost incurred till date /total cost complete]*100

383800/1010000*100

38%

905280/1104000*100

82%

100%
Gross profit on contract [contract revenue - Total cost to complete]

$1610000 - $1010000

$600000

$1610000 - $1104000

$506000

$1610000 - $1063000

$547000

2020 2021 2022
Gross profit to be recognized till date (Gross profit *% of completion)

$600000*38%

$228000

$506000*82%

$414920

$547000*
less:Gross profit recognized in earlier years 0 $228000 $424920
Gross profit recognized in current year $228000 $186920 $122080

b)

Date Account Title Debit Credit
2021
1 construction in progress $521480
cash /Accounts payable $521480
2 Accounts receivable $594000
Billing on construction in progress $594000
3 cash $546000
Accounts receivable $546000
4 construction expense $521480
construction in progress $186920
construction revenue $708400

Workings

1)Construction cost during 2021 = (905280 cost incurred till date -383800 cost in prior year ) =$521480

2)Billing during the year =896000-302000 =$594000

3)collection during the year = 817000-271000=$546000


Related Solutions

During 2020, Martinez Company started a construction job with a contract price of $1,610,000. The job...
During 2020, Martinez Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $405,900 $766,500 $1,076,000 Estimated costs to complete 584,100 328,500 –0– Billings to date 300,000 893,000 1,610,000 Collections to date 267,000 809,000 1,435,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount...
During 2020, Martinez Company started a construction job with a contract price of $1,610,000. The job...
During 2020, Martinez Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $405,900 $766,500 $1,076,000 Estimated costs to complete 584,100 328,500 –0– Billings to date 300,000 893,000 1,610,000 Collections to date 267,000 809,000 1,435,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount...
During 2020, Grouper Company started a construction job with a contract price of $1,610,000. The job...
During 2020, Grouper Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $434,300 $859,560 $1,073,000 Estimated costs to complete 575,700 242,440 –0– Billings to date 301,000 897,000 1,610,000 Collections to date 271,000 817,000 1,428,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Prepare all necessary journal entries for 2021. (Credit account...
During 2020, Blossom Company started a construction job with a contract price of $1,610,000. The job...
During 2020, Blossom Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $393,900 $760,380 $1,059,000 Estimated costs to complete 616,100 341,620 –0– Billings to date 299,000 905,000 1,610,000 Collections to date 268,000 818,000 1,421,000 (a) Your answer is correct. Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in...
During 2020, Flint Company started a construction job with a contract price of $1,610,000. The job...
During 2020, Flint Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $393,900 $760,380 $1,059,000 Estimated costs to complete 616,100 341,620 –0– Billings to date 299,000 905,000 1,610,000 Collections to date 268,000 818,000 1,421,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount...
During 2017, Larkspur Company started a construction job with a contract price of $1,610,000. The job...
During 2017, Larkspur Company started a construction job with a contract price of $1,610,000. The job was completed in 2019. The following information is available. 2017 2018 2019 Costs incurred to date $405,900 $766,500 $1,076,000 Estimated costs to complete 584,100 328,500 –0– Billings to date 300,000 893,000 1,610,000 Collections to date 267,000 809,000 1,435,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2017 $ Gross profit recognized...
During 2017, Culver Company started a construction job with a contract price of $1,610,000. The job...
During 2017, Culver Company started a construction job with a contract price of $1,610,000. The job was completed in 2019. The following information is available. 2017 2018 2019 Costs incurred to date       $393,900       $760,380       $1,059,000 Estimated costs to complete       616,100       341,620       –0– Billings to date       299,000       905,000       1,610,000 Collections to date       268,000       818,000       1,421,000    Compute the amount of gross profit to be recognized each year, assuming the...
During 2020, Shamrock Company started a construction job with a contract price of $1,600,000. The job...
During 2020, Shamrock Company started a construction job with a contract price of $1,600,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $405,900 $830,680 $1,074,000 Estimated costs to complete 584,100 262,320 –0– Billings to date 302,000 898,000 1,600,000 Collections to date 272,000 818,000 1,420,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount...
During 2020, Blossom Company started a construction job with a contract price of $1,590,000. The job...
During 2020, Blossom Company started a construction job with a contract price of $1,590,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $410,000 $901,180 $1,067,000 Estimated costs to complete 590,000 197,820 –0– Billings to date 297,000 903,000 1,590,000 Collections to date 271,000 805,000 1,434,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount...
During 2020, Sage Company started a construction job with a contract price of $1,620,000. The job...
During 2020, Sage Company started a construction job with a contract price of $1,620,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $444,400 $867,420 $1,060,000 Estimated costs to complete 565,600 230,580 –0– Billings to date 301,000 904,000 1,620,000 Collections to date 272,000 814,000 1,411,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT