Question
In: Accounting
On February 1, 2010, Marsh Contractors agreed to construct a building at a contract price of...
On February 1, 2010, Marsh Contractors agreed to construct a building at a contract price of $5,800,000. Marsh estimated total construction costs would be $4,000,000 and the project would be finished in 2012. Information relating to the costs and billings for this contract is as follows: 2014 2015 2016 Total costs incurred to date $1,500,000 $2,640,000 $4,600,000 Estimated costs to complete 2,500,000 1,760,000 -0- Customer billings to date 2,200,000 4,000,000 5,600,000 Collections to date 2,000,000 3,500,000 5,500,000
Instructions Fill in the correct amounts on the following schedule.For percentage-of-completion accounting and for completed-contract accounting, show the gross profit that should be recorded for 2010, 2011, and 2012.
Percentage-of-Completion Revenue
2010:
2011:
2012:
Completed-Contract Revenue
2010:
2011:
2012:
Percentage-of-Completion Gross Profit
2010:
2011:
2012:
Completed-Contract Gross Profit
2010:
2011:
2012:
Calculate the Over/Under Billing for:
2010:
2011:
2012:
Solutions
Expert Solution
Solution:
| Computation of % of completion, revenue recognition and Gross Profit - Marsh contractor | ||||||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) | Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) (G - A) |
| 2010 | $1,500,000 | $1,500,000 | $4,000,000 | 37.50% | $5,800,000 | $2,175,000 | $2,175,000 | $675,000 |
| 2011 | $1,140,000 | $2,640,000 | $4,400,000 | 60.00% | $5,800,000 | $3,480,000 | $1,305,000 | $165,000 |
| 2012 | $1,960,000 | $4,600,000 | $4,600,000 | 100.00% | $5,800,000 | $5,800,000 | $2,320,000 | $360,000 |
| Computation of Gross Profit - Revenue on completion - Marsh contractor | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | Contract Price (D) |
Gross Profit |
| 2010 | $1,500,000 | $1,500,000 | $4,000,000 | $5,800,000 | $0 |
| 2011 | $1,140,000 | $2,640,000 | $4,400,000 | $5,800,000 | $0 |
| 2012 | $1,960,000 | $4,600,000 | $4,600,000 | $5,800,000 | $1200,000 |
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ekkarill92 answered 8 months agoRelated Solutions
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