Problem 18-9 Sunland Construction Company has entered into a contract beginning
ID: 2551956 • Letter: P
Question
Problem 18-9 Sunland Construction Company has entered into a contract beginning January 1, 2017, to build a parking complex. It has been estimated that the complex will cost S594,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $901,000. The following data pertain to the construction period. 2017 2018 2019 Costs to date Estimated costs to complete Progress billings to date Cash collected to date s255,420 $433,620 $604,000 338,580 160,380 271,000 547,000 901,000 241,000 497,000 901,000 0- (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 0, please enter 0. Do not leave any fields blank.) Gross profit recognized in 2017 Gross profit recognized in 2018 Gross profit recognized in 2019s (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 2018 , Gross profit recognized in 2019Explanation / Answer
1.Percentage of Completion Method
2017 2018 2019
(A) Costs incurred to date 255420 433620 604000
Estimated future costs 338580 160380 0
(B) Estimated total costs 594000 594000 604000
Progress billings to date 271000 547000 901000
Cash collected to date 241000 497000 901000
C) Est. total gross profit (901000 - B) 307000 307000 297000
(D) Percent Complete (A/B) 43% 73% 100%
Rev. Recog. to Date (901000*D) 387430 657730 901000
Current Yr. Revenue Recognized 387430 270300 243270
Total GP Recognized to Date (C*D) 132010 224110 297000
Current Yr. Gross Profit Recognized 132010 92100 72890
Gross Profit Recognized
2017 = $ 132010
2018 = $ 92100
2019 = $ 72890
2.Completed-Contract Method
2017 = $0 - No gross profit would be recognized under completed-contract method.
2018 = $0 = No gross profit would be recognized under completed-contract method.
2019 = Gross profit = $ 2,97,000
Total Price $ 9,01,000
Total Cost ($6,04,000)
Gross Profit recognized 2019 $ 2,97,000