On February 1, 2010, Marcos Contractors agreed to construct a building at a cont
ID: 2558090 • Letter: O
Question
On February 1, 2010, Marcos Contractors agreed to construct a building at a contract price of $3,000,000. Marcos estimated total construction costs would be $2,000,000 and the project would be finished in 2012. Information relating to the costs and billings for this contract is as follows:
? 2010?? 2011?? 2012?
Total costs incurred to date?$ 750,000?$1,320,000?$2,300,000
Estimated costs to complete?1,250,000? 880,000?-0-
Customer billings to date?1,100,000? 2,000,000?3,000,000
Collections to date?1,000,000? 1,750,000?2,950,000
Instructions
1. Fill in the correct amounts on the following schedule. For percentage-of-completion and for completed-contract accounting, show the gross profit that should be recorded for 2010, 2011, and 2012.
2. Prepare all entries for 2010, 2011, and 2012 for Marco.
3. Prepare Statement of Financial Position ends of 2010, 2012 and 2011(if any) under Percentage of-completion-method, completed-contract method.
Explanation / Answer
Answer
1.
Calculation:
For 2010 =$750,000×$1,000,000 / $2,000,000 = $375,000
For 2011
=$1,320,000×$800,000 / $2,200,000 =$480,000
Less : 2010 gross profit =($375,000)
2011 gross profit =$105,000
For 2012
Total revenue $3,000,000
Total costs $2,300,000
Total gross profit $700,000
Recognized to date ($480,000)
2012 gross profit $220,000
For Completed-Contract 2012
Total revenue $3,000,000
Total costs $2,300,000
Total gross profit $700,000
(please post only one question)
Year Percentage-of-Completion Gross Profit Year Completed-Contract Gross Profit 2010 $375,000 2010 0 2011 $105,000 2011 0 2012 $220,000 2012 $700,000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.