Question

Oriole, Inc. began work in 2018 on a contract for $21420000.

Other data are as follows:

   2018    2019

Costs incurred to date $9180000 $14150000

Estimated costs to complete    $6120000    0

Billings to date    $7060000 $21300000

Collections to date $5060000 $18150000

If Oriole uses the percentage-of-completion method, the gross profit to be recognized in 2018 is

Answer 1

• If Oriole uses the percentage-of-completion method, the gross profit to be recognized in 2018 is
  = $ 3,672,000 = Answer
• Workings

Working		Year end 2018	Year end 2019
A	Contract Price	$     21,420,000.00	$    21,420,000.00
B	Cost Incurred to Date	$       9,180,000.00	$    14,150,000.00
C	Estimated cost yet to be incurred to complete the contract	$       6,120,000.00	$                            -
D = B+C	Total Cost	$     15,300,000.00	$    14,150,000.00
E = (B/D) x 100	% of Completion	60.00%	100.00%
F = A x E	Revenue to date	$     12,852,000.00	$    21,420,000.00
G	Revenue of Previous year	$                            -	$    12,852,000.00
H = F - G	Net Revenue this year	$     12,852,000.00	$       8,568,000.00
I (=B)	Cost to date	$       9,180,000.00	$    14,150,000.00
J	Cost to date of previous year	$                            -	$       9,180,000.00
K = I - J	Net Cost for the year	$       9,180,000.00	$       4,970,000.00
L = H - K	Gross Profits	$       3,672,000.00 = ANSWER	$       3,598,000.00