2. (1 5 points) Beavis Construction Company was the low bidder on a construction
ID: 2509353 • Letter: 2
Question
2. (1 5 points) Beavis Construction Company was the low bidder on a construction project The project was begun in 2015 and completed in to build an earthen dam for $1,800,000. 2016. Cost and other data are presented below 2015 2016 Costs incurred during the year Estimated costs to complete Billings during the year Cash collections during the year $450,000 $1,100,000 1,050,000 400,000 300,000 1,400,000 1,500,000 Assume that Beavis recognizes revenue on this contract over time according to percentage of completion Required Compute the amount of gross profit recognized during 2015 and 2016. 3.(12 points) The Allowance for Uncollectible accounts at the beginning of the year was $30,000. The Gross Accounts Receivable at the end of the year is shown below at $347,000. Using the information given: A) B) Prepare the AJE for Bad Debt Expense for 12/31/16. What is the Net Accounts Receivable at year end, 12/31/16? 12/31/2016 Percent Uncollectible Estimated Allowance Age Group 0-60 days 61-90 days 91-120 days Amount $225,550 69,400 34,700 120 days 17350 4% 15% 25% 40% $ 9,022 10,410 8,675 6.940 $35,047 TotalsExplanation / Answer
2. 2015:
Contract Revenue = $ 1,800,000.
Total costs estimated to complete = $ 450,000 + $ 1,050,000 = $ 1,500,000.
Total estimated gross profit on the contract = $ 1,800,000 - $ 1,500,000 = $ 300,000.
Percentage of completion at the end of 2015 = Costs incurred / Total estimated costs = $ 450,000 / $ 1,500,000 = 30%.
Gross profit to be recognized in 2015 = $ 300,000 x 30% = $ 90,000.
2016:
Total contract revenue = $ 1,800,000.
Total contract costs = $ 450,000 + $ 1,100,000 = $ 1,550,000
Gross Profit = $ 1,800,000 - $ 1,550,000 = $ 250,000.
Gross profit already recognized in 2015: $ 90,000
Gross profit to be recognized in 2016 = $ 250,000 - $ 90,000 = $ 160,000.
3. A.
B. Net accounts receivable at year end, 12/31/16 = $ 347,000 - $ 35,047 = $ 311,953.
Date Account Titles Debit Credit $ $ 12/31/16 Bad Debt Expense 5,047 Allowance for Uncollectible Accounts 5,047Related Questions
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