Question

Evans Construction, Inc. experienced the following construction activity in 2018, the first year of operations.

Contract		Total Contract Price		Billings Through 12/31/18		Cash Collections Through 12/31/18		Costs Incurred Through 12/31/18		Estimated Additional Costs to Complete
X		$261,000		$171,000		$156,000		$184,000		$  64,000
Y		331,000		116,000		116,000		102,000		253,000
Z		234,000		234,000		200,000		160,000		-0-
		$826,000		$521,000		$472,000		$446,000		$317,000

Prepare a partial income statement to indicate how the above contract information would be reported. Evans uses the completed-contract method

Prepare a partial balance sheet to indicate how the above contract information would be reported. Evans uses the completed-contract method. (List Current Assets in order of liquidity.)

Answer 1

Evans Construction, Inc. Income Statement For the Year 2018
Revenue from long-term contracts (contract Z)		234,000
Cost of construction (contract Z)		160,000
Gross profit		74,000
Provision for loss (contract Y)*		-24,000
*Contract costs through 12/31/18	102,000
Estimated costs to complete	253,000
Total estimated costs	355,000
Total contract price	331,000
Loss recognized in 2018	-24,000
Evans Construction, Inc. Balance Sheet As of 12/31/18
Current assets:
Accounts receivable ($521,000 – $472,000)		49000
Inventories
Construction in process (contract X)	184,000
Less: Billings	171,000
Unbilled contract costs		13,000
Current liabilities:
Billings (116,000) in excess of contract costs ($102,000)		14000
Estimated liability from long-term contracts		24,000