Question
In: Accounting
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,100,000. During 2018, costs of $2,040,000 were incurred, with
estimated costs of $4,040,000 yet to be incurred. Billings of
$2,548,000 were sent, and cash collected was $2,290,000.
In 2019, costs incurred were $2,548,000 with remaining costs
estimated to be $3,660,000. 2019 billings were $2,798,000, and
$2,515,000 cash was collected. The project was completed in 2020
after additional costs of $3,840,000 were incurred. The company’s
fiscal year-end is December 31. This project does not qualify for
revenue recognition over time.
Required:
1. Calculate the amount of revenue and gross
profit or loss to be recognized in each of the three years.
2a. Prepare journal entries for 2018 to record the
transactions described (credit "various accounts" for construction
costs incurred).
2b. Prepare journal entries for 2019 to record the
transactions described (credit "various accounts" for construction
costs incurred).
3a. Prepare a partial balance sheet to show the
presentation of the project as of December 31, 2018.
3b. Prepare a partial balance sheet to show the
presentation of the project as of December 31, 2019.
|
Year |
Revenue Recognized |
Gross Profit (Loss) Recognized |
|
2018 |
||
|
2019 |
-148000 |
|
|
2020 |
||
|
Total |
2018/
|
Record the construction costs. |
|
Record the progress billings. |
|
Record the cash collections. |
|
Record the expected loss. |
2019/
|
Record the construction costs. |
|
Record the progress billings. |
|
Record the cash collections. |
|
Record the expected loss. |
|
Balance Sheet |
|
At December 31, 2018 |
|
Current Assets: |
|
Current Liabilities: |
|
Balance Sheet |
|
At December 31, 2019 |
|
Current Assets: |
|
Current Liabilities: |
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,500,000. During 2018, costs of $2,200,000 were incurred, with
estimated costs of $4,200,000 yet to be incurred. Billings of
$2,740,000 were sent, and cash collected was $2,450,000.
In 2019, costs incurred were $2,740,000 with remaining costs
estimated to be $3,900,000. 2019 billings were $2,990,000, and
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On February 1, 2018, Arrow Construction Company entered into a
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estimated costs of $4,050,000 yet to be incurred. Billings of
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On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
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estimated costs of $4,180,000 yet to be incurred. Billings of
$2,680,000 were sent, and cash collected was $2,430,000.
In 2019, costs incurred were $2,680,000 with remaining costs
estimated to be $3,870,000. 2019 billings were $2,930,000 and
$2,655,000 cash was collected. The project was completed in 2020
after additional costs of...
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,540,000. During 2018, costs of $2,180,000 were incurred with
estimated costs of $4,180,000 yet to be incurred. Billings of
$2,680,000 were sent, and cash collected was $2,430,000.
In 2019, costs incurred were $2,680,000 with remaining costs
estimated to be $3,870,000. 2019 billings were $2,930,000 and
$2,655,000 cash was collected. The project was completed in 2020
after additional costs of...
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,000,000. During 2018, costs of $2,000,000 were incurred with
estimated costs of $4,000,000 yet to be incurred. Billings of
$2,500,000 were sent, and cash collected was $2,250,000.
In 2019, costs incurred were $2,500,000 with remaining costs
estimated to be $3,600,000. 2019 billings were $2,750,000, and
$2,475,000 cash was collected. The project was completed in 2020
after additional costs of...
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On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,425,000. During 2018, costs of $2,170,000 were incurred, with
estimated costs of $4,170,000 yet to be incurred. Billings of
$2,704,000 were sent, and cash collected was $2,420,000.
In 2019, costs incurred were $2,704,000 with remaining costs
estimated to be $3,855,000. 2019 billings were $2,954,000, and
$2,645,000 cash was collected. The project was completed in 2020
after additional costs of...
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,100,000. During 2018, costs of $2,040,000 were incurred, with
estimated costs of $4,040,000 yet to be incurred. Billings of
$2,548,000 were sent, and cash collected was $2,290,000. In 2019,
costs incurred were $2,548,000 with remaining costs estimated to be
$3,660,000. 2019 billings were $2,798,000, and $2,515,000 cash was
collected. The project was completed in 2020 after additional costs
of...
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,400,000. During 2018, costs of $2,160,000 were incurred, with
estimated costs of $4,160,000 yet to be incurred. Billings of
$2,692,000 were sent, and cash collected was $2,410,000. In 2019,
costs incurred were $2,692,000 with remaining costs estimated to be
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collected. The project was completed in 2020 after additional costs
of...
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,540,000. During 2018, costs of $2,180,000 were incurred with
estimated costs of $4,180,000 yet to be incurred. Billings of
$2,680,000 were sent, and cash collected was $2,430,000. In 2019,
costs incurred were $2,680,000 with remaining costs estimated to be
$3,870,000. 2019 billings were $2,930,000 and $2,655,000 cash was
collected. The project was completed in 2020 after additional costs
of...
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