Chapter 18 - (d) How much gross profit should be reported...

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Problem Chapter 18 Name: __________________________ 1. Percentage-of-completion method. Rollins Construction Co. contracted to build a bridge for $5,500,000. Construction began in 2009 and was completed in 2010. Data relating to the construction are: 2009 2010 Cost incurred $1,650,000 $2,100,000 Estimated costs to complete $1,800,000 Garnet uses the percentage-of-completion method. Instructions (a) How much revenue should be reported for 2009? Show your computation. (b) Make the entry to record progress billings of $2,400,000 during 2009. (c) Make the entry to record the revenue and gross profit for 2009.
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Unformatted text preview: (d) How much gross profit should be reported for 2010? Show your computation. (a) Revenue should be reported for 2009: 5,500,000*(1,650,000/3,450,000)= 2,630,435 (b) Account receivable 2,400,000 Billing on construction in process 2,400,000 (c) Construction in Process (gross profit) 980,435 Construction expense 1,650,000 Revenue from long-term contract 2,630,435 (d) Gross profit should be reported of 2010 = (5,500,000-1,650,000-2,100,000)- 980,435 = 769,565 Page 1...
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This note was uploaded on 03/27/2012 for the course ACCT 3321 taught by Professor Chambers during the Spring '09 term at Texas A&M University, Corpus Christi.

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