BU Contractors received a contract to construct an office building for $19,000,000. Construction wasbegun in 2021 and completed in 2023. Cost and other data are presented below:Cost Incurred during the yearEstimated total costs to complete20217,650,0009,350,00020223,725,0006,125,00020236,625,0006,000,0007,000,0006,000,0005,500,000 7,100,000 6,400,000Billings during the yearCash collections during the yearBU recognizes revenue over time according to percentage of completion.Required:Prepare all journal entries to record costs, billings, collections, and profit recognition.Compute the Gross Profit on the job for each year. Compute the ending Accounts Receivable foreach year.

Percentage of Completion Method is an accounting method used for valuation of long term contracts to…

BU Contractors received a begun in 2021 and completed in 2023. Cost and other data are presented below Cost Incurred during the year Estimated total costs to complete llings during the year sh collections during the year 2022 3,725,000 6,625,000 6,125,000 6,000,000 7,000,000 6,000,000 5,500,000 7,100,000 6,400,000 2021 7,650,000 9,350,000 2023 entage of completion.

BU Contractors received a begun in 2021 and completed in 2023. Cost and other data are presented below Cost Incurred during the year Estimated total costs to complete llings during the year sh collections during the year 2022 3,725,000 6,625,000 6,125,000 6,000,000 7,000,000 6,000,000 5,500,000 7,100,000 6,400,000 2021 7,650,000 9,350,000 2023 entage of completion.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Dalton Construction Co. contracted to build a bridge for $10,000,000. Construction began in 2021 and was completed in 2022. Data relating to the construction are: Costs incurred during the year Estimated costs to complete Dalton uses the percentage-of-completion method. 2021 $3,300,000 2,700,000 2022 $2,750,000 Instructions (a) How much revenue should be reported for 2021? Show your computation. (b) Make the entry to record progress billings of $4,100,000 during 2021. (c) Make the entry to record the revenue and gross profit for 2021. (d) How much gross profit should be reported for 2022? Show your computation.
Oriole Construction Company began work on a $420,000 construction contract in 2025. During 2025, Oriole incurred costs of $264, 500, billed its customber for $207,000, and collected $179,500. December 31, 2025, the estimated additional costs to complete the project total $159, 650. Prepare Oriole's journal entry to record profit or loss, if any, using (a) the percentage - of - completion method and (b) the cost-recovery method.
Brady Construction Company contracted to build an apartment complex for a price of $5,000,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1through 6, involving differing costs for the project. All costs are stated in thousands of dollars.Costs Incurred During YearEstimated Costs to Complete(As of the End of the Year)Situation 2018 2019 2020 2018 2019 20201 1,500 2,100 900 3,000 900 —2 1,500 900 2,400 3,000 2,400 —3 1,500 2,100 1,600 3,000 1,500 —4 500 3,000 1,000 3,500 875 —5 500 3,000 1,300 3,500 1,500 —6 500 3,000 1,800 4,600 1,700 —Required:Copy and complete the following table:Gross Profit (Loss) RecognizedOver Time Upon CompletionSituation 2018 2019 2020 2018 2019 2020123456
Pharoah, Inc. began work on a $6,909,000 contract in 2025 to construct an office building. During 2025, Pharoah, Inc. incurred costs of $1,791,800, billed its customers for $1,174,000, and collected $1,035,000. At December 31, 2025, the estimated additional costs to complete the project total $3,478,200. Prepare Pharoah's 2025 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Construction in Process Materials, Cash, Payables (To record costs incurred.) Accounts Receivable Billings on Construction in Process (To record billings.) cash Accounts Receivable (To record collections.) Construction in Process Construction Expenses Revenue from Long-Term…
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows: Cost incurred during the year $ 2,016,000 $ 2,808,000 $ 2,613,600 Estimated costs to complete as of year-end 5,184,000 2,376,000 0 Billings during the year 2,180,000 2,644,000 5,176,000 Cash collections during the year 1,890,000 2,500,000 5,610,000 Westgate recognizes revenue over time according to percentage of completion. 4. Compute the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.) Cost incurred during the year $ 2,016,000 $ 3,890,000 $ 3,290,000…
Sandhill Inc. began work on a $8,900,000 non-cancellable contract in 2023 to construct an office building. During 2023, Sandhill incurred costs of $1,672,000, billed its customers for $1,450,000 (non-refundable), and collected $900,000. At December 31, 2023, the estimated future costs to complete the project totalled $2,728,000. Prepare Sandhill's 2023 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation (To record cost of construction) (To record progress billings) (To record collections) (To record revenues) (To record construction expenses) Debit Credit
Sheridan Construction Co. contracted to build a bridge for $10,500,000. Construction began in 2024 and was completed in 2025. Data relating to the construction are: Costs incurred during the year Estimated costs to complete (a) 2024 $4,095,000 Revenue $ 2,730,000 Sheridan uses the percentage-of-completion method. How much revenue should be reported for 2024? 2025 $2,780,000
GinebraCorporation recognizes construction revenue and cost using the percentage of completion method. During 2021, a single long-term project was begun which continued through 2021. Information on the project follows: 2021. 2022 Partial billing on contract 1,000,000. 4,200,000 Accounts receivable 1,000,000 3,000,000 Construction cost 1,050,000 1,920,000 Construction in progress 1,220,000 3,640,000 What is the gross profit recognized from this long-term construction contract in year 2021 and 2022, respectively? 2021 2022 A.220,000. 2,280,000 B.170,000. 500,000 C.220,000. 1,000,000 D.170,000. 1,280,000
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: 2024 $ 3,096,000 5,504,000 2,600,000 2,400,000 2025 Cost incurred during the year Estimated costs to complete as of year-end $ 3,870,000 1,634,000 4,366,000 Billings during the year 3,034,000 Cash collections during the year 4,200,000 3,400,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. 2026 $ 1,797,400 0
On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as itsoffice headquarters. The building was completed on September 30, 2019. Expenditures on the project were asfollows:January 1, 2018 $1,000,000March 1, 2018 600,000June 30, 2018 800,000October 1, 2018 600,000January 31, 2019 270,000April 30, 2019 585,000August 31, 2019 900,000On January 1, 2018, the company obtained a $3 million construction loan with a 10% interest rate. The loanwas outstanding all of 2018 and 2019. The company’s other interest-bearing debt included two long-termnotes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2018 and 2019. Interest is paid annually on all debt. The company’s fiscal year-end isDecember 31.Required:1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interestmethod.2. What is the total cost of the building?3. Calculate the amount of…
Flounder, Inc. began work on a $6,504,000 contract in 2020 to construct an office building. During 2020, Flounder, Inc. incurred costs of $1,639,900, billed its customers for $1,300,000, and collected $1,055,000. At December 31, 2020, the estimated additional costs to complete the project total $3,650,100.Prepare Flounder’s 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Novak, Inc. began work on a $ 6,466,000 contract in 2020 to construct an office building. During 2020, Novak, Inc. incurred costs of $ 1,547,340, billed its customers for $ 1,085,000, and collected $ 1,013,000. At December 31, 2020, the estimated additional costs to complete the project total $ 3,003,660.Prepare Novak’s 2020 journal entries using the percentage-of-completion method