Question

Revenue Recognition In 2017, Chicago Construction began work on a three-year construction project to build a...

Revenue Recognition

In 2017, Chicago Construction began work on a three-year construction project to build a new performing arts complex (the "PAC"). Chicago uses the percentage-of-completion method of accounting. At the end of 2017, the company completed 25% of the project. The following financial statement information indicates the results to date for the PAC at the end of 2017:

Actual Cost incurred in 2017     $35 million

Construction in progress (as of 12/31/2017)                                                                                                    $50 million

Accounts Receivable from construction billings (as of 12/31/2017) $60 million

Additional information: As of 12/31/2017, management’s estimate of total cost indicates that the project will be profitable. Zero cash regarding the billings on the construction has been collected in 2017.

  1. Provide the journal entry to record revenue, cost of goods sold from the construction for the year 2017 and journal entry to record billings (two journal entries).8 pts

2) what is the estimated cost to complete the project as of the end of 2017?

3) what is the total contract price?

4) Present part of Balance Sheet as of 12/31/2017 indicating the necessary account regarding the construction project

5)   Suppose that during 2018 , the company incurred $60 million in costs on the project and that on December 31, 2018, the company estimated the costs to complete the project to be $142.5 million.  Compute the amount of revenue and COGS the company should recognize in 2018.  (10 pts)   (Hint: this is the 2nd year of contract)


Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In 2017, Chicago Construction began work on a three-year construction project to build a new performing...
In 2017, Chicago Construction began work on a three-year construction project to build a new performing arts complex (the "PAC"). Chicago uses the percentage-of-completion method of accounting. At the end of 2017, the company completed 25% of the project. The following financial statement information indicates the results to date for the PAC at the end of 2017: Actual Cost incurred in 2017                                                                                                                                                              $35 million Construction in progress (as of 12/31/2017)                                                                                                   $50 million Accounts Receivable from construction billings (as of...
During 2018 ESAU Construction began work on a project 2018-03B for a contract price of $12.8m....
During 2018 ESAU Construction began work on a project 2018-03B for a contract price of $12.8m. ESAU incurred costs of $4m in 2018 and estimated at the end of the year that the remaining costs to complete the job would be $5.5m. During 2019 the company expended $3.0m and at year-end estimated that an additional $3.5m of costs would be incurred in 2020 to finish the project. Assuming that ESAU books $3.0m of expenses for this project in 2019, provide...
During 2018 ESAU Construction began work on a project 2018-03B for a contract price of $12.8m....
During 2018 ESAU Construction began work on a project 2018-03B for a contract price of $12.8m. ESAU incurred costs of $4m in 2018 and estimated at the end of the year that the remaining costs to complete the job would be $5.5m. During 2019 the company expended $3.0m and at year-end estimated that an additional $3.5m of costs would be incurred in 2020 to finish the project. Assuming that ESAU books $3.0m of expenses for this project in 2019, provide...
Nash Construction Company uses the percentage-of-completion method of accounting. In 2017, Nash began work under contract...
Nash Construction Company uses the percentage-of-completion method of accounting. In 2017, Nash began work under contract #E2-D2, which provided for a contract price of $2,234,000. Other details follow: 2017 2018 Costs incurred during the year $615,980 $1,420,000 Estimated costs to complete, as of December 31 1,005,020 –0– Billings to date 413,000 2,234,000 Collections during the year 351,000 1,530,000 (a) What portion of the total contract price would be recognized as revenue in 2017? In 2018? Revenue recognized in 2017 $...
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,210,000. During 2021, costs of $2,070,000 were incurred with estimated costs of $4,070,000 yet to be incurred. Billings of $2,570,000 were sent, and cash collected was $2,320,000. In 2022, costs incurred were $2,570,000 with remaining costs estimated to be $3,705,000. 2022 billings were $2,820,000 and $2,545,000 cash was collected. The project was completed in 2023 after additional costs of...
On July 1, 2017, Torvill Construction Company Inc. contracted to build an office building for Gumbel...
On July 1, 2017, Torvill Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,900,000. On July 1, Torvill estimated that it would take between 2 and 3 years to complete the building. On December 31, 2019, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2017, 2018, and 2019. At 12/31/17 At 12/31/18 At 12/31/19...
Windham Construction Company uses the percentage of completion method of accounting. In 2018 Windham started work...
Windham Construction Company uses the percentage of completion method of accounting. In 2018 Windham started work on a two-year contract with a total price of $15,000,000. Data for 2018 and 2019 are presented below: (Follow GAAP)                                                                  2018                            2019                       Costs incurred to date             $7,200,000                  $12,050,000             Estimated costs to complete   4,800,000                         - 0 -             Billings during the year          6,000,000                      9,000,000             Collections during the year     4,200,000                      8,900,000 (a)       How much...
In 2016 the ole construction corp began construction work under a 3 year contract. The contract...
In 2016 the ole construction corp began construction work under a 3 year contract. The contract price was $1,600,000. The Job was completed in 2018.                                                                                 2016                       2017                       2018 Costs incurred to date                                    400000                  935000                  1070000 Estimated costs to complete                       700000                  165000                  0 Billings to date                                                  300000                  900000                  1600000 Collections to date                                           270000                  810000                  1525000 Compute the amount of Gross Profit to be recognized for 2016 and 2017 assuming that ole is required to recognize revenue overtime. Compute the...
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,225,000. During 2021, costs of $2,090,000 were incurred, with estimated costs of $4,090,000 yet to be incurred. Billings of $2,608,000 were sent, and cash collected was $2,340,000. In 2022, costs incurred were $2,608,000 with remaining costs estimated to be $3,735,000. 2022 billings were $2,858,000, and $2,565,000 cash was collected. The project was completed in 2023 after additional costs of...
McCombs Contractors received a contract to construct a mental health facility for $2,500. Construction was begun...
McCombs Contractors received a contract to construct a mental health facility for $2,500. Construction was begun in 2017 and completed in 2018. Cost and other data are presented below:                                                                         2017                2018 Costs incurred during the year                         $1,500 $1,300 Estimated costs to complete                              1,200 0 Billings during the year                                    1,200 1,300 Cash collections during the year                        1,000 1,500 Compute the amount of revenue and gross profit recognized during 2017 and 2018. Assume that McCombs recognizes revenue on this contract over...