Shanahan Construction Company has entered into a contract beginning January 1, 2

Question

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 $492,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $738,000. The following data pertain to the construction period. Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (Enter loss amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period. (Enter loss amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Explanation / Answer

0.365 Total profit = 738000-492000 246000 Decreased Profit 500200-492000 8200 237800 Percentage of Completion Method Cost 221400 369000 500200 Percentage 45 75 100% Gross Profit 110700 73800 53300 246000*45% 246000*30% 237800-110700-73800

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