Question

During 2018, Miners Inc. started a construction job with a contract price of $20,000. The job...

During 2018, Miners Inc. started a construction job with a contract price of $20,000. The job was completed in 2020 and information for the three years of construction is as follows:

Required:

Using the PERCENTAGE-OF-COMPLETION (cost-to-cost) method:

Show and label all calculations.

(a)  

Calculate the total percentage complete for the contract at the end of each year. Round the percentage complete to two decimal places (ie. 12.34%).

(b)

Calculate the amount of gross profit that Miners should be recognized each year on the contract.

(c)

What would be the value of the Contract Asset/Liability account at December 31, 2018 (and indicate if it is in an asset or liability position)?

2018

2019

2020

TOTAL costs incurred to date (ie sum of all costs, for all years, incurred at the end of the year)

$4,000

$6,500

$7,600

Estimated costs to complete the project (as estimated at year end)

7,000

6,600

-0-

Billings to date

3,800

6,000

10,200

Collections to date

2,200

4,800

9,000
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