Exercise 18-33 rk During 2017, Vaughn Company started a construction job with a

Question

Exercise 18-33 rk During 2017, Vaughn Company started a construction job with a contract price of $1,580,000. The job was in 2019. The following information is available. 2018 Estimated costs to complete Billings to date Collections to date 2017 $430,000 $766,500 $1,067,000 570,000 328,500 297,000 900,000 1,580,000 272,000 817,000 1,411,000 -0 tudy Compute the amount of gross profit to be recognized each year, assuming the percentage-of completion met compasba Gross profit recognized in 2017 Gross profit recognized in 2018s Gross profit recagnized in 2019 the original Softwa Qut Prepare all necessary journal entries for 2018. (Credit account titles are automatically i entered. Do not indent manually, If no entry is required, select "No Entry" for the account o for the amounts. For costs incurred use account Materials, Cash, Payables.) ndented when titles a Account Titles and Explanation Debit Credit

Explanation / Answer

Hey there !!

In this question, we need to calculate the gross profit for each year and also record the journal entries for the for the year 2018.

Have a look at the table below to understand how to calculate the gross profit step by step...

Also note that Gross Profit is Amount of Revenue Billed less the Total Cost Incurred till date.

I hope the table is clear to you...you may refer the contents in bracket to understand how a particular amount is flowing in the row...

Now that we are done with our calculation, we may prepare our journal entries...

I hope the solution is now clear to you....do let me know if you have any other queries !! happy studying :) All the best !!!!

Particulars 2017 2018 2019 Total a Contract Value 15,80,000 15,80,000        15,80,000 b Costs Incurred till date (Cumulative)    4,30,000     7,66,500        10,67,000 c Total Amount billed till date (Cumulative)    2,97,000     9,00,000        15,80,000 d Gross Profit (b-c) -1,33,000     1,33,500           5,13,000     5,13,500 e Total Amount Collected till date    2,72,000     8,17,000        14,11,000 f Amount collected during the period
(Current Yr Cum. Collection less PY Cumulative Collection Row e)    2,72,000     5,45,000           5,94,000 14,11,000 g Estimated Costs to complete    5,70,000     3,28,500 h Cost Incurred during the period
(Current Yr Cum. Cost less PY Cumulative Cost row B)    4,30,000     3,36,500           3,00,500 10,67,000 i Amount Billed for the Period
(Current Yr Cum. Amt billed less PY Cumulative billed amt row c)    2,97,000     6,03,000           6,80,000 15,80,000

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