(a) Shanahan Construction Company has entered into a contract beginning January
ID: 2448970 • Letter: #
Question
(a)
Shanahan Construction Company has entered into a contract beginning January 1, 2014, to build a parking complex. It has been estimated that the complex will cost $624,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $936,000. The following data pertain to the construction period.2014 2015 2016 Costs to date $280,800 $468,000 $634,400 Estimated costs to complete 343,200 156,000 0 Progress billings to date 280,800 572,000 936,000 Cash collected to date 249,600 520,000 936,000
Explanation / Answer
2014 2015 2016 contract price 936,000 936,000 936,000 Total estimated cost (624,000) (624000) (634400) Gross profit 312,000 312,000 301600 % of completion 280,800 / 624,000 = .45 468,000 /624000 = .75 100% Gross profti to be recognise 312000 *.45 = 140400 312000 * (.75-.45) = 93,600 301600-140400-93600= 67600
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