Problem 18-10 On March 1, 2017, Whispering Construction Company contracted to co
ID: 2334984 • Letter: P
Question
Problem 18-10
On March 1, 2017, Whispering Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,490,000. The building was completed by October 31, 2019. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2017, 2018, and 2019 are given below:
2017
2018
2019
(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any fields blank.)
2017
2018
2019
(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any fields blank. Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Explanation / Answer
1
2017 Cost to Date 2907000 Estimated cost to Complete 35,53,000 Estimated Total Cost 64,60,000 Percent Complete 0.45 Revenue Recognized 8,490,000*45% 3820500 Less Cost incured 2907000 Gross Profit recgnized 913500 2018 Cost to Date 5372800 Estimated cost to Complete 19,87,200 Estimated Total Cost 73,60,000 Percent Complete 0.73 Revenue Recognized 8,490,000*73%-3820500 2377200 Less Cost incured 1987200 Gross Profit recgnized 390000 2019 Total Revenue Recognized 8490000 Total C0st incurred 7360000 Total Profit on Contract 1130000 Less Profit previously recognized 1303500 (Loss) Recognized in 2019 -173500