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.
- 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
Answer #1
Not the answer you're looking for?
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...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 26 minutes ago
asked 31 minutes ago
asked 41 minutes ago
asked 45 minutes ago
asked 51 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago