Exercise 6-24 (Algo) Long-term contract; revenue recognition over time; solve for unknowns [LO6-9]

In 2021, Long Construction Corporation began construction work under a three-year contract. The contract price is $3,200,000. Long recognizes revenue over time according to percentage of completion for financial reporting purposes. The financial statement presentation relating to this contract at December 31, 2021, is as follows:

Required:
1. What was the cost of construction actually incurred in 2021?
2. How much cash was collected in 2021 on this contract?
3. What was the estimated cost to complete as of the end of 2021?
4. What was the estimated percentage of completion used to calculate revenue in 2021? (Round your percentage answer to 2 decimal places.)

Madoff Construction Company uses the percentage of completion method (cost to cost method) for their long term construction contracts.....

They were working on a contract for which they would receive $900,000 at completion....

In 2024, they reported a gross profit of 58,440.....

2025 was a disastrous year for the company. As of the end of the year, they had incurred costs of $800,000 (which includes costs for both 2024 and 2025) , and think it is going to cost 120,266 to finish the project.

How much of a loss should they report in 2025? (Enter the loss as a positive number...Example: loss of "150,000".)

PERCENTAGE OF COMPLETION METHOD AttiK Construction Company currently has a long-term construction project. The project has a contract price of $130,000,000 with total estimated costs of $100,000,000. AttiK appropriately uses the percentage of completion method. After 2 years of construction, the following costs have been accumulated: Actual cost incurred, Year 1 $30,000,000 Total estimated costs remaining after Year 1 70,000,000 Actual cost incurred, Year 2 50,000,000 Total estimated cost remaining after Year 2 20,000,000 Determine the gross profit for each of the first 2 years of the construction contract.

Section A – Hotel Business in Hong Kong Question A1 Answer the below short questions (a) to (i) according to A Statistical Review of Hong Kong Tourism 2018, published by Hong Kong Tourism Board in June 2019.

a) What is the total number of visitor arrival to Hong Kong upon 2018? How many visitors stayed overnight?

b) Identify Hong Kong’s top THREE source markets of visitors’ arrival to Hong Kong in 2018.

c) Which month contained the highest visitor arrivals number in 2018?

d) Briefly describe the hotel performance in 2018.

e) Which hotel category noted a highest gain percentage in room occupancy compare with 2017?

f) State TWO districts which recorded the highest room occupancy rate in Hong Kong.

g) In 2017, which department in the hotel earn the second highest revenue and what is the total percentage.

h) Refer to the hotel room occupancy rate and average achieved hotel room rate in 2018, illustrate TWO indicators or messages reflected from those figures.

i) The percentage distribution of visitor arrivals by months 2018 were quite steady along the year, the range of percentage starting from 7.2% to 10.1%. If you were the manager of a hotel, try to briefly explain the reasons behind of the distributions. (For example: What is/are the factor(s) may affect the percentage of arrival on Dec 2018.)

At the beginning of 2012, Massachusetts Road Construction entered into a contract to build a road for the government. Construction will take 3 years. The following information as of December 31st, 2012 is available for the contract:

Assume that the company estimates percentage complete based on costs incurred as a percentage of total estimated costs. Under the Percentage-of-Completion method, how much revenue will be reported in 2012?

$6,000,000

please advise on the tendering and contractual arrangements for the construction of a 5-star hotel in Tung Chung new town. Since the proposed project is to be a major development, the Client is anxious on the cost aspects
The client wishes to have indication of the amount of investment and is concerned o the cost-control aspect. He also intends to commence the work at a reasonable time.
Suggest to the Client with reason, a suitable contractual arrangement for his consideration. (at less 350 words)

B. Jane Botosan operates a Hostelworld in an area near Amsterdam. Depreciation on the hotel is $60,000 per year. Jane employs a maintenance person at an annual salary of $41,000 and a cleaning person at an annual salary of $24,000. Real estate taxes are $10,000 per year. The rooms rent at an average price of $60 per person per night including breakfast. Other costs are laundry and cleaning service at a cost of $10 per person per night and the cost of food which is $5 per person per night.

Instructions

1. DeterminethenumberofrentalsandthesalesrevenueJaneneedstobreak even using the contribution margin technique.

2. If the current level of rentals is 4,000, by what percentage can rentals decrease before Jane has to worry about having a net loss?

3. Jane is considering upgrading the breakfast service to attract more business and increase prices. This will cost an additional $3 for food costs per person per night. Jane feels she can increase the room rate to $68 per person per night. Determine the number of rentals and the sales revenue Jane needs to break even if the changes are made.

Topic: Construction

Let us assume that there is a large high school to be built on the East Coast of Florida near the beach. What type of block would be recommended i.e., compressive, fire rating, architecturally pleasing to the public eye? Remember to factor in cost, permanence, maintenance and safety.

Harper Theater is located in Midtown Mall. The cashier’s booth is near the entrance to the theater. Two cashiers are employed. Once works from 1-5 p.m., the other from 5-9 P.M.   Each cashier is bonded. The cashiers receive cash from customers and operate a machine that ejects serially numbered tickets. The rolls of tickets are inserted and locked into the machine by the theater manager at the beginning of each cashier’s shift.

After purchasing a ticket, the customer takes the ticket to an usher stationed at the entrance to the theater lobby some 60 feet from the cashier’s booth. The usher tears the ticket in half, admits the customer, and returns the ticket stub to the customer. The other half of the ticket is dropped into a locked box by the usher.

At the end of each cashier’s shift, the theater manager removes the ticket roll from the machine and makes a cash count. The cash count sheet is initialed by the cashier. At the end of the day, the manager deposits the receipts in total in a bank night deposit vault located in the mall. The manager also sends copies of the deposit slip and the initialed cash count sheets to the theater company treasurer for verification and to the company’s accounting department. Receipts from the first shift are stored in a safe located in the manager’s office.

1.) Identify the internal control procedures and their application to the cash receipts transactions of the Harper Theater. You will find the Internal Control Procedures on pages 433 through 435 of your textbook. For each Internal Control Procedure described in your textbook, identify any Internal Control Procedures that Harper Theater has in place and/or is missing. Be specific and use at least 300 words for your answer.
Be specific and use at least 300 words for your answer.

2.) If the usher and cash decide to collaborate to misappropriate cash, what actions might they take? For each action, what internal control might be employed to stop the misappropriation of cash? Be specific and use at least 200 words for your answer.

3.) Use complete sentences and good grammar.  

• The following information is for Winter Break Hotel. Given the information, questions from #14 to #16.
o Average room selling price: $65
o Average variable cost per room: $17
o Annual total fixed costs: $450,000
o Sales goal (= Net Income) of the hotel this year: $5,000,000
o Number of rooms available per day: 400 rooms
o This hotel is open 365 days a year.

What is the occupancy percentage required to reach the sales goal? (Round to the second decimal place.)

A. 23.43%

B. 9.46%

C. 23.65%

D. 77.77%

For every $1 of sales, how much can this hotel use to pay on fixed costs or to generate profits?

A. $2.82

B. $.82

C. $.26

D. $.74

If this hotel experiences an increase in its fixed cost by $35,000 this year, how many additional rooms must be sold to absorb this increase? (Round up to the nearest whole number.)

A. 730 rooms

B. 21,722 rooms

C. 727 rooms

D. 11,667 rooms