Allen Inc. began work on a $15,000,000 contract in 2015 to construct a stadium e

Question

Allen Inc. began work on a $15,000,000 contract in 2015 to construct a stadium expansion project. During 2015, Allen incurred costs of $6,000,000, billed its customer $4,000,000 and collected $3,500,000. At December 31, 2015, the estimated future costs to complete the project totaled $4,000,000. Allen uses the percentage-of-completion method and will reflect the following amounts at December 31, 2015: (ie: show as1,000,000 not 1000000)

1. Accounts Receivable Blank =

2. Gross Profit recorded in Inventory-CIP Blank =

3. Costs & Profits in Excess of Billings Blank =

Explanation / Answer

Accounts receivable 4,000,000-3,500,000                     5,00,000.00 (Billed -Received) Cost incurred in the project 60,00,000 Cost to Be incurred 40,00,000 Total Cost of The project 1,00,00,000 Contract Price $                1,50,00,000 Gross profit on contract(150-100) $                    50,00,000 % completion of the project(60/100*100) 60 % Gross profit Recorded in Inventory CIP(50,00,000*60%) $                    30,00,000 Costs in excess of billing(1,000,0000-4,000,000) 60,00,000 Profit in excess of billing $                    50,00,000

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