Question
In: Accounting
MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 2019 and...
MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 2019 and was completed in 2020. Information relating to the contract follows:
| 2019 | 2020 | ||||||
| Costs incurred during the year | $ | 290,000 | $ | 150,000 | |||
| Estimated additional cost to complete | 145,000 | — | |||||
| Billings during the year | 260,000 | 265,000 | |||||
| Cash collections during the year | 240,000 | 285,000 | |||||
Required:
Record the preceding transactions in MSK’s books assuming it recognizes revenue over time and uses costs incurred to measure the extent to which its performance obligation has been satisfied.
Record the preceding transactions in MSK’s books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project.
Solutions
ekkarill92 answered 7 months agoRelated Solutions
In January 2019, Miller Construction Corp. contracted to construct a building for $3,600,000. Construction started in...
In January 2019, Miller Construction Corp. contracted to
construct a building for $3,600,000. Construction started in early
2019 and was completed in 2020. The following additional
information is available:
2019
2020
Cost Incurred
$1,458,000
$1,620,000
Estimated costs to complete
1,560,000
-
Billed
1,700,000
1,900,000
Collections during the year
1,440,000
2,160,000
Miller uses the percentage-of-completion method.
Under the contract-based approach for percentage completion,
a) How much revenue should Miller report for 2019 and 2020?
b) Prepare all journal entries for 2019...
In January 2019, Miller Construction Corp. contracted to construct a building for $3,600,000. Construction started in...
In January 2019, Miller Construction Corp. contracted to
construct a building for $3,600,000. Construction started in early
2019 and was completed in 2020. The following additional
information is available:
2019
2020
Costs
incurred......................................................
$1,458,000
$1,620,000
Estimated costs to
complete..................................
1,560,000
—
Billed
……………………………………………….
1,700,000
1,900,000
Collections during the
year....................................
1,440,000
2,160,000
Miller uses the percentage-of-completion method.
Instructions
Under the contract-based approach for percentage
completion,
a) How much revenue should Miller report for 2019...
In January 2010, Construction Corp. contracted to construct a building for $ 6,000,000. Construction started in...
In January 2010, Construction Corp. contracted to construct a
building for $ 6,000,000. Construction started in early 2010 and
was completed in 2011. The following additional information is
available:
2010
2011
Costs
incurred.............................................................
$
2,430,000
$ 2,700,000
Estimated costs to
complete.............................................
2,600,000
—
Collections during the
year..............................................
2,400,000
3,600,000
Billings for
the year …………………………………………..
2,800,000
3,200,000
Used the percentage-of-completion method.
Instructions
Under the contract-based approach,
a) How much revenue
should be reported...
On May 1, 2020, Jackson Construction Company contracted to construct a factory building for a total...
On May 1, 2020, Jackson Construction Company contracted to
construct a factory building for a total contract price of
$9,600,000. The building was completed by May 31,2022. The annual
contract costs incurred, estimated costs to complete the contract,
and accumulated billings to Fabrik for 2020, 2021, and 2022 are
given
below.
2020
2021
2022
Contract costs incurred during the year
$3,400,000
$2,400,000
$2,900,000
Estimated costs to complete the contract at Dec
31 ...
On March 1, 2017, Oriole Construction Company contracted to construct a factory building for Fabrik Manufacturing...
On March 1, 2017, Oriole Construction Company contracted to
construct a factory building for Fabrik Manufacturing Inc. for a
total contract price of $8,450,000. The building was completed by
October 31, 2019. The annual contract costs incurred, estimated
costs to complete the contract, and accumulated billings to Fabrik
for 2017, 2018, and 2019 are given below: 2017 2018 2019 Contract
costs incurred during the year $3,052,800 $2,254,300 $1,962,900
Estimated costs to complete the contract at 12/31 3,307,200
1,962,900 –0– Billings...
On March 1, 2017, Shamrock Construction Company contracted to construct a factory building for Fabrik Manufacturing...
On March 1, 2017, Shamrock Construction Company contracted to
construct a factory building for Fabrik Manufacturing Inc. for a
total contract price of $8,390,000. The building was completed by
October 31, 2019. The annual contract costs incurred, estimated
costs to complete the contract, and accumulated billings to Fabrik
for 2017, 2018, and 2019 are given below: 2017 2018 2019 Contract
costs incurred during the year $3,003,300 $2,179,700 $2,117,000
Estimated costs to complete the contract at 12/31 3,386,700
2,117,000 –0– Billings...
On March 1, 2017, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing...
On March 1, 2017, Pechstein Construction Company contracted to
construct a factory building for Fabrik Manufacturing Inc. for a
total contract price of $8,400,000. The building was completed by
October 31, 2019. The annual contract costs incurred, estimated
costs to complete the contract, and accumulated billings to Fabrik
for 2017, 2018, and 2019 are given below.
2017
2018
2019
Contract Costs Incurred during the year
$2,208,000
$2,230,000
$2,190,000
Estimated Costs to Complete the Contract at 12/31
$3,520,000
$2,190,000
-0-
Billings...
On March 1, 2017, Oriole Construction Company contracted to construct a factory building for Fabrik Manufacturing...
On March 1, 2017, Oriole Construction Company contracted to
construct a factory building for Fabrik Manufacturing Inc. for a
total contract price of $8,410,000. The building was completed by
October 31, 2019. The annual contract costs incurred, estimated
costs to complete the contract, and accumulated billings to Fabrik
for 2017, 2018, and 2019 are given below:
2017
2018
2019
Contract costs incurred during the year
$2,916,400
$2,079,200
$2,244,400
Estimated costs to complete the contract at 12/31
3,423,600
2,244,400
–0–
Billings...
Problem 18-10 On March 1, 2017, Sandhill Construction Company contracted to construct a factory building for...
Problem 18-10
On March 1, 2017, Sandhill Construction Company contracted to
construct a factory building for Fabrik Manufacturing Inc. for a
total contract price of $8,310,000. The building was completed by
October 31, 2019. The annual contract costs incurred, estimated
costs to complete the contract, and accumulated billings to Fabrik
for 2017, 2018, and 2019 are given below:
2017
2018
2019
Contract costs incurred during the year
$2,871,000
$2,304,900
$2,114,100 (2019 Row)
Estimated costs to complete the contract at 12/31...
On March 1, 2019, Asbah contracted Nabali & Fares Construction Co. to construct a building on...
On March 1, 2019, Asbah contracted Nabali & Fares
Construction Co. to construct a building on land costing $800,000
(purchased from the contractor and included in the first payment).
The construction began on the office building on March 1. The
following expenditures were incurred for construction:
Date Expenditures
March 1, 2019 $ 1,200,000
May 1, 2019 1,680,000
August 1, 2019 3,000,000
September 30, 2019 4,800,000
The building was completed and ready for occupancy on
September 30, 2019. To finance purchase...
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