Beavis Construction Company was the low bidder on a construction project to buil
ID: 2508885 • Letter: B
Question
Beavis Construction Company was the low bidder on a construction project to build an earthen dam for $1,800,000 The project was begun in 2012 and completed in 2013. Cost and other data are presented below 2012 Costs incurred during the year 450,000 S1.100,000 Estimated costs to complete Billings during the year Cash collections during the year Assume that Beavis uses the pencentage-of-completion method for revenue recognition 1050,000 00,000 1.400,000 00,000 500,000 Required: I.Compute the amount of gross profit recognized during 2012 and 2 all journal entries related to the construction project in 2012 and 2013. Statement of Financial Position end of 2012 and 2013(if any).Explanation / Answer
Beavis construction construction company was low bidder on a construction to build an earthen dam for $1,800,000
PART-1)
Year: 2012
Contract price
1,800,000
Actual costs to date
450,000
Estimated costs to complete
1,050,000
Total estimated project costs
1,500,000
Estimated total gross proft
300,000
Percentage oF completion
30%
Gross proft recognized
90,000
Year: 2013
Contract price
1,800,000
Costs incurred:
2012
450,000
2013
1,100,000
1,550,000
Total gross proft
250,000
Recognized in 2012
90,000
Recognized in 2013
160,000
PART-2)
Year-2012
Construction in progress
450,000
Cash or A/P
450,000
Accounts receivable
400,000
Billings on construction contract
400,000
Cash
300,000
Accounts receivable
300,000
Construction in progress
90,000
Cost of construction
450,000
Revenue from long-term contracts
540,000
Year-2013
Construction in progress
1,100,000
Cash or A/P
1,100,000
Accounts receivable
1,400,000
Billings on construction contract
1,400,000
Cash
1,500,000
Accounts receivable
1,500,000
Construction in progress
1,60,000
Cost of construction
1,100,000
Revenue from long-term contracts
1,260,000
Billings on construction contract
1,800,000
Construction in progress
1,800,000
?
Year: 2012
Contract price
1,800,000
Actual costs to date
450,000
Estimated costs to complete
1,050,000
Total estimated project costs
1,500,000
Estimated total gross proft
300,000
Percentage oF completion
30%
Gross proft recognized
90,000
Year: 2013
Contract price
1,800,000
Costs incurred:
2012
450,000
2013
1,100,000
1,550,000
Total gross proft
250,000
Recognized in 2012
90,000
Recognized in 2013
160,000