CH18 - E18-4 a Nilsen Company Compute the amount of gross...

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Unformatted text preview: E18-4 a. Nilsen Company Compute the amount of gross profit each year 2010 2011 20 Contract price: $1,600,000 $1,600,000 Less estimated cost: Costs to date $400,000 $825,000 $1,070,000 Estimated costs to complete 600,000 275,000 0 Estimated total costs 1,000,000 1,100,000 Estimated total gross profit 600,000 500,000 Percentage completed to date * 40% 75% Total gross profit recognized 240,000 375,000 Less: Gross profit recognized in previous years 0 240,000 Gross profit recognized in current years $240,000 $135,000 * Percentage completed to date=Costs to date/Estimated total costs b. Nilsen Company 2010 2011 2012 Revenue recognized in: 2010 $1,600,000*40% 640,000 2011 $1,600,000*75% 1,200,000 Less: Revenue recognized in 2010 640,000 Revenue in 2011 560,000 2012 $1,600,000*100% 1,600,000 Less: Revenue recognized in 2010 and 2012 1,200,000 Revenue in 2012 400,000 Gross profit recognized in: 2010 $600,000*40% 240,000 2011 $500,000*75% 375,000 Less: Gross profit recognized in 2010 240,000 Gross profit in 2011 135,000 2012 $530,000*100% 530,000 Less: Gross profit recognized in 2010 and 2011 375,000 Gross profit in 2012 155,000 Nilsen Company Journal entries During 2011 Construction in Process ($825,000-$400,000) 425,000 Materials, Cash, Payables, etc. 425,000 Accounts Receivable ($900,000-$300,000) 600,000 Billings on Construction in Process 600,000 Cash ($810,000-$270,000) 540,000 Accounts Receivable 540,000 Construction Expenses 425,000 Construction in Process (gross profit) 135,000 Revenue from Long-Term Contracts 560,000 c. Nilsen Company Gross profit recognized 2010 2011 2012 Revenue on contracts $0 $0 $16,000,000 Cost of contruction 0 0 1,070,000 Gross profit $0 $0 $530,000 012 $1,600,000 1,070,000 530,000 100% 530,000 375,000 $155,000 E18-11...
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This note was uploaded on 11/16/2010 for the course ACCT acct 103 taught by Professor Rishard during the Spring '10 term at American River.

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CH18 - E18-4 a Nilsen Company Compute the amount of gross...

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