Assighment for Ch.s ncome measurement and Profitability Analysis On February 1,
ID: 2557942 • Letter: A
Question
Assighment for Ch.s ncome measurement and Profitability Analysis 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: $2,300,000 Total costs incurred to date Estimated costs to complete Customer billings to date $ 750,000 1,250,000 $1,320,000 880,000 100,000 000 1,750,000 3,000,000 2,950,000 Collections to date 1,000,000 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. s English (CAN)Explanation / Answer
Percentage completion method 2010 2011 2012 Cost incurred in till previous year 0 750000 1320000 ADD Cost incurred during the year 750000 570000 980000 Total cost incurred till date 750000 1320000 2300000 ADD Estimated cost to be incurred 1250000 880000 0 Total estimated cost to be incurred 2000000 2200000 2300000 Percentage of completion (A) 37.50% 60.00% 100% (cost incurred till date /total estimated cost ) Total revenue (B) 3000000 3000000 3000000 Total revenue recognized (A *B) 1125000 1800000 3000000 Less Revenue recognized in previous year 0 1125000 1800000 revenue recognized in current year 1125000 675000 1200000 2010 2011 2012 Revenue 1125000 675000 1200000 Less Cost incurred 750000 570000 980000 Gross profit 375000 105000 220000 Completed contracts 2010 2011 2012 Revenue 0 0 3000000 Less Cost incurred 0 0 2300000 Gross profit 0 0 700000 2010 1 Construction in progress 750000 Accounts payable 750000 2 Contracts receivable 1100000 Progress billings 1100000 3 Construction in progress 375000 Construction expense 750000 Construction revenue 1125000 4 Cash 1000000 Contract receivable 1000000 2011 1 Construction in progress 570000 Accounts payable 570000 2 Contracts receivable 900000 Progress billings 900000 3 Construction expense 570000 Construction in progress 105000 Construction revenue 675000 4 Cash 750000 Contract receivable 750000 2011 1 Construction in progress 980000 Accounts payable 980000 2 Contracts receivable 1000000 Progress billings 1000000 3 Construction expense 980000 Construction in progress 220000 Construction revenue 1200000 4 Cash 1200000 Contract receivable 1200000