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In: Accounting

Problem 5-10 Part 4 4. Calculate the amount of revenue and gross profit (loss) to be...

Problem 5-10 Part 4 4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)

2018 2019 2020
Cost incurred during the year $ 2,184,000 $ 3,860,000 $ 3,260,000
Estimated costs to complete as of year-end 5,616,000 3,160,000 0
2018 2019 2020
Revenue $2,800,000
Gross profit (loss) $616,000

UPDATE: Total Contract price is $10,000,000

Solutions

Expert Solution

  • All working forms part of the answer
  • Answers

2018

2019

2020

Revenue

$                2,800,000.00

$               3,766,710

$                    3,433,290

Gross Profit (Loss)

$                   616,000.00

$                   180,000.00

$                     (100,000.00)
  • Workings

Working

2018

2019

2020

A

Contract Price

$             10,000,000.00

$             10,000,000.00

$                  10,000,000.00

B

Cost Incurred to Date

$                2,184,000.00

$               6,044,000.00

$                    9,304,000.00

C

Estimated cost yet to be incurred to complete the contract

$                5,616,000.00

$               3,160,000.00

$                                         -  

D = B+C

Total Cost

$                7,800,000.00

$               9,204,000.00

$                    9,304,000.00

E = (B/D) x 100

% of Completion

28.00%

65.67%

100.00%

F = A x E

Revenue to date

$                2,800,000.00

$               6,566,710.13

$                  10,000,000.00

G

Revenue of Previous year

$                                     -  

$               2,800,000.00

$                    6,566,710.13

H = F - G

Net Revenue this year

$                2,800,000.00

$               3,766,710.13

$                    3,433,289.87

I (=B)

Cost to date

$                2,184,000.00

$               6,044,000.00

$                    9,304,000.00

J

Cost to date of previous year

$                                     -  

$               2,184,000.00

$                    6,044,000.00

K = I - J

Net Cost for the year

$                2,184,000.00

$               3,860,000.00

$                    3,260,000.00

L = A - D

Estimated Gross Profit (Loss)

$                2,200,000.00

$                   796,000.00

$                        696,000.00

M

Gross Profit (Loss) to be recognised

$                   616,000.00

$                   180,000.00

$                     (100,000.00)

ekkarill92 answered 9 months ago
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