Ayayal Construction Company has entered into a contract beginning January 1, 201

Question

Ayayal Construction Company has entered into a contract beginning January 1, 2017, to buaild a parking complex. It has been take 3 years to construct. The complex will be billed to the purchasing company at $896,000. The following data pertain to the construction period. and wi 2017 2018 2019 Costs to date Estimated costs to complete Progress billings to date Cash collected to date 339,360 193,920 270,000 545,000 896,000 240,000 495,000 896,000 (a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is O, please enter 0. Do not leave any fields blank.) Gross profit recognized in 2017 Gross profit recognized in 2018 Gross profit recognized in 2019 (b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is o, please enter 0. Do not leave any fields blank.) Gross profit recognized in 2017 Gross profit recognized in 2018s Gross profit recognized in 2019 Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

1.Percentage of Completion Method

                                                                   2017           2018           2019

(A) Costs incurred to date                          266640       412080      617000

Estimated future costs                                339360      193920      0

(B) Estimated total costs                            606000       606000       617000

Progress billings to date                             270000       545000       896000

Cash collected to date                                 240000       495000       896000

C) Est. total gross profit (896000 - B) 290000       290000       279000

(D) Percent Complete (A/B) 44%            68%            100%

Rev. Recog. to Date (896000*D) 394240       609280       896000

Current Yr. Revenue Recognized                394240       215040       286720

Total GP Recognized to Date (C*D) 127600      197200       279000

Current Yr. Gross Profit Recognized 127600       69600                   81800

Gross Profit Recognized

2017 = $ 127600

2018 = $ 69600

2019 = $ 81800

2.Completed-Contract Method

                                                                   2017           2018           2019

(A) Costs incurred to date                          266640       412080      617000

Estimated future costs                                339360      193920      0

(B) Estimated total costs                            606000       606000       617000

Progress billings to date                             270000       545000       896000

Cash collected to date 240000       495000       896000

C) Est. total gross profit (896000 - B) 290000       290000       279000

(D) Percent Complete (A/B)                       44%            68%            100%

Rev. Recognized to Date                             0                 0                896000

Total GP Recognized to Date 0                 0                 279000

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