NRE Construction Company commences the construction of specialised fast carriages on 1 July 2019. It signs a fixed-price contract for total revenue of $180million. It was revised to 185 million in 2022. The project is expected to be completed by the end of 30 June 2022. The expected cost at the commencement of construction was $160 million. The expected costs to complete a construction project can change throughout the project. The following data relate to the project:

The contract is completed as expected on 30 June 2022. NRE Construction Company uses the percentage-of-completion method to account for its construction contract. Company's financial year end 30 June every year.

REQUIRED

a) Compute the gross profit to be recognised for each of the three years

b) Provide the journal entries for each year. Assume the stage of completion can be reliably determined. (Exclude journal narrations)

Ex. 18-134—Percentage-of-completion method. Penner Builders contracted to build a high-rise for €35,000,000. Construction began in 2018 and is expected to be completed in 2020. Data for 2018 and 2019 are:

   2018 2019

costs incurred to date    4.5M 13M

Estimated cost to complete 18M. 12M

Penner uses the percentage-of-completion method.

Instructions

A: How much gross profit should be reported for 2018? Show your computation.

B: How much gross profit should be reported for 2019?

C: Make the journal Entry to record the revenue and gross profit for 2019

What is the average percentage of time that construction workers and productive according to James Adrian (2004)?

Circle the correct answer symbol

1. installment sales for 2018 is $600,000 and cost of goods sold $300,000 while the installment sales in 2019 is $1,000,000 and cost of goods sold $800,000, cash collection from 2018 sales was $400,000 in 2018 and $200,000 in 2019, cash collection from 2019 sales was $500,000 in 2019 and $500,000 in 2020, using installment sales method compute gross profit rate for two years sales?

a.

2018 is 50% and 2019 is 20%.

b.

2018 is 20% and 2019 is 50%.

c.

2018 is 50% and 2019 is 50%.

d.

2018 is 20% and2019 is 20%.

2. Imar Construction company signed a contract to build new bridge at a contract price of $5,000,000 and total estimated cost of $4,000,000 the project will be completed within 4 years, the cost incurred to date for each period is, first year $1,000,000- second year $2,500,000- third year $3,200,000 and fourth year $4,100,000 while the estimasted cost to,complete the project for each each period is, first year $3,000,000- second year $1,700,000- third year $1,000,000 and fourth year is $0, based on above question and using Cost recover method, what is the gross profit recognized in second year?

a.

$226,190.

b.

$476,190.

c.

$250,000.

d.

0

3. installment sales for 2018 is $600,000 and cost of goods sold $300,000 while the installment sales in 2019 is $1,000,000 and cost of goods sold $800,000, cash collection from 2018 sales was $400,000 in 2018 and $200,000 in 2019, cash collection from 2019 sales was $500,000 in 2019 and $500,000 in 2020, using cost recovery method compute gross profit realized in 2018?

a.

$100,000.

b.

$300,000.

c.

$150,000.

d.

$200,000.

4. estimated cost of $4,000,000 the project will be completed within 4 years, the cost incurred to date for each period is, first year $1,000,000- second year $2,500,000- third year $3,200,000 and fourth year $4,100,000 while the estimasted cost to, complete the project for each each period is, first year $3,000,000- second year $1,700,000- third year $1,000,000 and fourth year is $0, based on above question and using percentage of completion method, what is the required journal entry in first year?

a.

Debit Construction Expense $3,0000,000, debit construction in process $1,000,000, credit construction revenue $5,000,000.

b.

Debit Construction Expense $1,0000,000, debit Unralized GP $250,000, credit construction revenue $1,250,000.

c.

Debit Construction Expense $1,0000,000, debit construction in process $250,000, credit construction revenue $1,250,000.

d.

Debit Construction Expense $3,0000,000, debit construction in process $900,000, credit construction revenue $5,000,000.

5. installment sales for 2018 is $600,000 and cost of goods sold $300,000 while the installment sales in 2019 is $1,000,000 and cost of goods sold $800,000,cash collection from 2018 sales was $400,000 in 2018 and $200,000 in 2019,cash collection from 2019 sales was $500,000 in 2019 and $500,000 in 2020, using cost recovery method compute unrealized gross profit in 2019?

a.

$150,000.

b.

$200,000.

c.

$300,000.

d.

$100,

1. In 20x1, Build Construction Corporation contracted to build a motel. The contract price is $600,000 and the total cost is estimated as $400,000. Over the construction period there has been no change in either the contract price or the estimated total cost. Costs incurred for 20x1 and 20x2 are $200,000 and $160,000, respectively. How much gross profit should be recognized in 20x1 under the percentage-of-completion method?

A) $80,000

B) $100,000

C) $120,000

D) $160,000

2.When using the percentage-of-completion method to account for a long term contract, the gross profit recognized in the first year of a three-year construction project generally is the estimate of total gross profit from the project multiplied by the ratio of:

A) Estimated costs to complete to estimated total costs.

B) Estimated costs to complete to actual costs incurred to date.

C) Estimated total costs to estimated costs to complete.

D) Actual costs incurred to date to estimated total costs.

3.Harry Retails Ltd. extends credit to its customers. Since uncollectible accounts are immaterial, management has decided to use the direct write-off method to account for bad debt expenses. Which of the following would be true?

A) Receivables likely will be overstated.

B) The matching principle is violated if the write-off occurs in the period the receivable is created.

C) The direct write-off method is more costly from an operational stand point.

D) All of the above are true.

Change in Accounting Principle - Retroactive Approach

In 2017, The UC Construction Company changed from the completed-contract method to the percentage-of-completion method of accounting for long-term construction contracts. The company continued to use the completed-contract method for tax purposes. The tax rate is 30 percent. The comparative income statements issued previously (using the completed-contract method) showed the following:

The comparative statements of retained earnings issued for the same years were:          

For years before 2014, pretax income using the completed-contract method was $350,000. Pretax income computed for the percentage-of-completion and completed-contract methods are as follows:     

Prepare comparative statements of retained earnings for the four years, assuming UC Construction changed its method of construction accounting from the completed-contract method to the percentage-of-completion method in 2017.

The COVID-19 pandemic has caused many retailers to shut down their business, layoff their employees, and drain their bank accounts.

While some federal funding will help these businesses stay afloat, many will have to adjust to new ways of operation once the quarantines are lifted.

Several ways can be used to reframe a retailer’s business model. Form reconfiguration; Time reconfiguring; Place reconfiguring; Possession reconfiguring. Using at least three of these methods of reframing, describe how a retailer of your choice will adjust its business model to be successful in reopening.

Choose a specific retailer from one of these categories:
Theme Park; Salon; Hotel; Beauty Supply Store; Sports Bar

he mayor of a town has proposed a plan for the construction of an adjoining bridge. A political study took a sample of 1000 voters in the town and found that 57% of the residents favored construction. Using the data, a political strategist wants to test the claim that the percentage of residents who favor construction is above 53%. Make the decision to reject or fail to reject the null hypothesis at the 0.20 level.

Emma has noticed a small red fox living in the park near her apartment. She takes a walk at the same time every day and has observed the fox in three different areas: in the woods, in the meadow, and by the pond.

If it is in the woods on one observation, then it is twice as likely to be in the woods as in the meadow on the next observation but not by the pond.

If it is in the meadow on one observation, then it is equally likely to be in any of the three locations on the next observation.

If it is by the pond on one observation, there is a 0.5 probability it will be by the pond on the next observation and will otherwise be in the woods.

When Emma went for a walk today, the red fox was in the woods.

a. Define the states and construct the transition matrix for this Markov chain.

b. Find the initial distribution vector for this Markov Chain.

c. Determine the probability that the red fox is in each of the three areas tomorrow.

If this trend continues, what is the probability the red fox will be in the meadow in the long run?

Show all work to support your answer. Correct answers without supporting work will not receive credit.

1. Many people in the small town of Econville have complained that there is no park for children to use afterschool. There are 20 households in the town, 10 who have children and 10 who do not. The households with children value the park being built at $100 each while the other households value it at $20 each. The town estimates that the cost of building a park is $600. All households earn the same income.

   1. (a) Would describe the park as a public good? Explain.

   2. (b) The first proposal is fund the park with a flat tax. What is the minimal tax per household required to build the park? Who will and who will not support such a tax and will the park be built?

   3. (c) A second proposal is a tax that only applies to the households with children. What tax per household will ensure that the park is built? Who will and who will not support such a tax? Why?

   4. (d) Athirdproposalisataxpaymentthatisproportionaltothebenefiteachhousehold receives from the park. In this proposal, how much will each household be expected to pay? Who will and who will not support such a tax? Why?

   5. (e) Evaluate the three policies listed and state which you will choose and why.