ACC410 E18-3 - Gross profit recognized in current year...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
P18- 3 Page 976 On March 1, 2010, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000 The information that follows pertains to the construction period: 2010 2011 2012 2012 Activity Costs to date: $600,000 $1,560,000 $2,100,000 $540,000 Estimated costs to complete: 1,400,000 520,000 0 Progress billing to date: 1,050,000 2,000,000 3,000,000 $1,000,000 Cash collected to date: 950,000 1,950,000 2,850,000 $900,000 Gross profit recognized in: 2010 2011 2012 Contract price $3,000,000 $3,000,000 $3,000,000 Costs: Costs to date $600,000 $1,560,000 $2,100,000 Estimated costs to complete 1,400,000 2,000,000 520,000 2,080,000 2,100,000 Total estimated profit 1,000,000 920,000 900,000 Percentage completed to date 30% 75% 100% Total gross profit recognized 300,000 690,000 900,000 Less: GP recognized in previous years 0 300,000 690,000
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Gross profit recognized in current year $300,000 $390,000 $210,000 2010 = $600,000 / $2,000,000 = 30%, 2011 = $1,560,000 / $2,080,000 = 75% Construction in Process ($2,100,000 - $1,560,000) 540,000 Materials, Cash, Payables, etc. 540,000 1 Accounts Receivable ($3,000,000 - $2,000,000) 1,000,000 Billings on Construction in Process 1,000,000 Cash ($2,850,000 $1,950,000) 900,000 Accounts Receivable 900,000 Construction Expenses ($2,100,000 - $1,560,000) 540,000 Construction in Process 210,000 Revenue from Long-term Contracts [$3,000,000 * (100% - 75%)] 750,000 Billings on Construction in Process 3,000,000 Construction in Process 3,000,000 CHANCE COMPANY Balance Sheet (Partial) December 31, 2011 Current assets: Accounts receivable $50,000 Inventories Construction in process ($1,560,000 + $690,000) $2,250,000 Less: Billings 2,000,000 Costs and recognized gross profit in excess of billings $250,000 2...
View Full Document

Page1 / 2

ACC410 E18-3 - Gross profit recognized in current year...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online