Midterm Practice

Midterm Practice - E1810 (LongTermContractReporting)

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E18-10 (Long-Term Contract Reporting)   Berstler Construction Company began operations in 2010. Construction activity for the first year is shown below. All contracts  are with different customers, and any work remaining at December 31, 2010, is expected to be completed in 2011.    Project  Total Contract Price Billings through 12/31/10 Cash Collections through 12/31/10 Contract Costs Incurred through 12/31/10 Estimated Additional Costs to Complete 1 $560,000 $360,000 $340,000 $450,000 $130,000 2 670,000 220,000 210,000 126,000 504,000 3 520,000 500,000 440,000 330,000 -0-   $1,750,000 $1,080,000 $990,000 $906,000 $634,000 Prepare a partial income statement and balance sheet to indicate how the above information would be reported for financial  statement purposes. Berstler Construction Company uses the completed-contract method.  (For negative numbers use  either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).) BERSTLER CONSTRUCTION COMPANY  Partial Income Statement
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Year Ended December 31, 2010 Revenues from long-term contracts $520,000 Costs of construction 330,000 Gross profit 190,000     Loss recognized in 2010 (20,000) BERSTLER CONSTRUCTION COMPANY Partial Balance Sheet  December 31, 2010 Current assets:         Accounts receivable   $90,000     Inventories               Construction in process $430,000             Less: Billings 360,000             Unbilled contract costs   70,000       Current liabilities:         Billings in excess of contract costs   94,000 E18-10 BERSTLER CONSTRUCTION COMPANY  Partial Income Statement
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Year Ended December 31, 2010 Revenues from long-term contracts  (Project 3) $520,000  Costs of construction  (Project 3) 330,000  Gross profit 190,000        Loss on long-term contract (Project 1) * (20,000)       * Computation of loss (Project 1)           Contract costs through 12/31/10 $450,000        Estimated costs to complete 130,000        Total estimated costs 580,000        Total contract price 560,000        Loss recognized in 2010 $(20,000)
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BERSTLER CONSTRUCTION COMPANY Partial Balance Sheet December 31, 2010 Current assets:          Accounts receivable   $90,000         ($1,080,000 - $990,000)            Inventories    
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Midterm Practice - E1810 (LongTermContractReporting)

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