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Chapter 18 assignment and solution

# Chapter 18 assignment and solution - Completed-Contract...

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CHAPTER 18 HOMEWORK - SOLUTIONS Ex. 18-127 —Percentage-of-completion and completed-contract methods. On February 1, 2010, Marsh Contractors agreed to construct a building at a contract price of \$6,000,000. Marsh estimated total construction costs would be \$4,000,000 and the project would be finished in 2012. Information relating to the costs and billings for this contract is as follows: 2010 2011 2012 Total costs incurred to date \$1,500,000 \$2,640,000 \$4,600,000 Estimated costs to complete 2,500,000 1,760,000 -0- Customer billings to date 2,200,000 4,000,000 5,600,000 Collections to date 2,000,000 3,500,000 5,500,000 Instructions Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and for completed-contract accounting, show the gross profit that should be recorded for 2010, 2011, and 2012. Percentage-of-Completion Completed-Contract Gross Profit Gross Profit 2010 ____________ 2010 ____________ 2011 ____________ 2011 ____________ 2012 ____________ 2012 ____________ Solution 18-127 Percentage-of-Completion

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Unformatted text preview: Completed-Contract Gross Profit Gross Profit 2010 \$750,000 a 2010 — 2011 \$210,000 b 2011 — 2012 \$440,000 c 2012 \$1,400,000 d a \$1,500,000 ————— × \$6,000,000 = \$2,250,000 revenue \$4,000,000 1,500,000 cost 750,000 margin b \$2,640,000 ————— × \$6,000,000 = \$3,600,000 revenue (cumulative) \$4,400,000 2,640,000 cost 960,000 margin \$1,350,000 revenue (2011 only) 1,140,000 cost 210,000 margin c Total revenue \$6,000,000 (cumulative) Total costs 4,600,000 Total gross profit 1,400,000 2,400,000 revenue (2012 only) 1,960,000 440,000 d Revenue \$6,000,000 Costs 4,600,000 Gross profit \$1,400,000 JOURNAL ENTRIES FOR 2010 Dr Construction in process 1,500,000 CR Cash, payables, etc. 1,500,000 DR Receivables 2,200,000 CR Construction in process 2,200,000 DR Cash 2,000,000 CR Receivables 2,000,000 DR Construction expenses 1,500,000 CR Construction in process 1,500,000 DR Construction in process 2,250,000 CR Construction revenue 2,250,000...
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Chapter 18 assignment and solution - Completed-Contract...

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