PRACTICAL QUESTION
Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:
|
For the year ended 30 June |
|||
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date |
1,700,000 |
3,000,000 |
4,800,000 |
|
Estimated costs to complete |
2,800,000 |
1,700,000 |
- |
|
Progress billings to date |
1,400,000 |
2,600,000 |
5,000,000 |
|
Cash received to date |
1,200,000 |
2,200,000 |
5,000,000 |
Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.
Required
Determine the percentage of completion for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date (A) |
|||
|
Estimated costs to complete (B) |
|||
|
Estimated total cost (A+B=C) |
|||
|
Percent of completion (POC=A/C) |
Calculate revenue and gross profit for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|||||
|
$ |
$ |
$ |
|||||
|
Contract Price |
|||||||
|
Contact Price x POC |
|||||||
|
LessRevenue recognised in previous years |
|||||||
|
= Revenue recognised for the year |
|||||||
|
Less Costs for the year |
|||||||
|
= Gross profit for the year |
|||||||
Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.
|
2019 $m |
2020 $m |
2021 $m |
|||
|
(i) |
To record costs incurred: |
||||
|
(ii) |
To record billings to customers: |
||||
|
(iii) |
To record cash collections: |
||||
|
(iv) |
To record periodic income recognised: |
||||
In: Accounting
In March, you bought 4 tickets to Lady GaGa's concert at Fenway Park in July for $125 each. Due to Covid issues the concert was postponed to August 7. You are unable to go and want to sell your $125 ticket. Whoever you sell the ticket to, you will have to send to by mail for a postage cost of $15 (with postal insurance). What is the minimum amount you would be willing to sell the ticket for? Explain your answer.
In: Economics
Describe in detail a “business process”from Mandarin Hotel.
In: Operations Management
National Park Tours Co. is a travel agency. The nine transactions recorded by National Park Tours during May 2019, its first month of operations, are indicated in the followingT accounts:
| Cash | Equipment | Beth Worley, Drawing | |||||
|---|---|---|---|---|---|---|---|
| (1) 32,000 | (2) 2,250 | (3) 23,000 | (9) 3,200 | ||||
| (7) 12,800 | (3) 4,150 | ||||||
| (4) 3,500 | |||||||
| (6) 9,600 | |||||||
| (9) 3,200 | |||||||
| Accounts Receivable | Accounts Payable | Fees Earned | |||||
|---|---|---|---|---|---|---|---|
| (5) 17,300 | (7) 12,800 | (6) 9,600 | (3) 18,850 | (5) 17,300 | |||
| Supplies | Beth Worley, Capital | Operating Expenses | |||||
|---|---|---|---|---|---|---|---|
| (2) 2,250 | (8) 1,300 | (1) 32,000 | (4) 3,500 | ||||
| (8) 1,300 | |||||||
a. Prepare an unadjusted trial balance, listing the accounts in their proper order. Place the amounts in the proper columns. If an entry is not required in an amount box, leave it blank.
| National Park Tours Co. | ||
| Unadjusted Trial Balance | ||
| May 31, 2019 | ||
| Debit Balances |
Credit Balances |
|
| Cash | ||
| Accounts Receivable | ||
| Supplies | ||
| Equipment | ||
| Accounts Payable | ||
| Beth Worley, Capital | ||
| Beth Worley, Drawing | ||
| Fees Earned | ||
| Operating Expenses | ||
b. Based upon the unadjusted trial balance,
determine the net income or net loss.
$
Feedback
b. Consider the accounts involved in determining net income or net loss.
In: Accounting
National Park Tours Co. is a travel agency. The nine
transactions recorded by National Park Tours during May 2019, its
first month of operations, are indicated in the following T
accounts:
| Cash | Equipment | Beth Worley, Drawing | |||||
|---|---|---|---|---|---|---|---|
| (1) 75,000 | (2) 900 | (3) 8,000 | (9) 2,500 | ||||
| (7) 8,150 | (3) 1,600 | ||||||
| (4) 6,280 | |||||||
| (6) 2,700 | |||||||
| (9) 2,500 | |||||||
| Accounts Receivable | Accounts Payable | Fees Earned | |||||
|---|---|---|---|---|---|---|---|
| (5) 12,300 | (7) 8,150 | (6) 2,700 | (3) 6,400 | (5) 12,300 | |||
| Supplies | Beth Worley, Capital | Operating Expenses | |||||
|---|---|---|---|---|---|---|---|
| (2) 900 | (8) 660 | (1) 75,000 | (4) 6,280 | ||||
| (8) 660 | |||||||
Prepare the nine journal entries from which the postings were made. For a compound transaction, if an amount box does not require an entry, leave it blank.
| (1) | |||
| (2) | |||
| (3) | |||
| (4) | |||
| (5) | |||
| (6) | |||
| (7) | |||
| (8) | |||
| (9) | |||
Check My Work
In: Accounting
In: Accounting
true or false
1) Business travel demand for hotel rooms in an area is 80% and vacation travel demand 20%. Annual compound business travel growth is 7% and vacation travel 10%. Total composite growth rate is 7.6%.
2) The business traveler component of demand for hotel rooms in an area is 80% and has been growing at 7% a year. Composite growth rate is 56%.
In: Accounting
In: Statistics and Probability
You are trying to decide whether to take a vacation. Most of the costs of the vacation (airfare, hotel, and forgone wages) are measured in dollars, but the benefits of the vacation are psychological. How can you compare the benefits to the costs? Compare the airfare and hotel costs of the vacation to the foregone wages. Determine the benefits of what you give up by going on the vacation, and compare them to the benefits of going on the vacation. Get a degree in psychology.
In: Economics
A hotel chain wanted to learn about the level of experience of its general managers. A random sample of 14 general managers was taken, and these managers had a mean of 11.72 years of experience. Suppose that the standard deviation of years of experience for all general managers in the chain is known to be 3.2 years. What is the lower limit of a 95% confidence interval for the mean experience of all general managers in this hotel chain?
In: Statistics and Probability