Question

Seasons Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion...

Seasons Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1,550,000 each quarter. The total contract price is $18,600,000 and Seasons estimates total costs of $17,750,000. Seasons estimates that the building will take 3 years to complete, and commences construction on January 2, 2021.

Seasons Construction completes the remaining 25% of the building construction on December 31, 2023, as scheduled. At that time the total costs of construction are $18,750,000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that Seasons will recognize for the year ended December 31, 2023? Revenue Expenses

a. $18,600,000 $18,750,000

b. $4,650,000 $ 4,687,500

c. $4,650,000 $ 5,250,000

d. $4,687,500 $ 4,687,500

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The amount of Revenue from Long Term Contract and Contruction Expenses for the year ended December 31.2023 is calculated below:

The amount of contract price is = $18,600,000

So the amount of Revenue from Long Term Contract = $18,600,000*25%

= $4,650,000

So the amount of Revenue from Long Term Contract = $4650,000

The total construction cost = $18,750,000

contruction Expenses = $18,750,000*25%

= $4,687,500

Revenue = $ 4,650,000 and Contruction Expenses = $4,687,500

So correct answer is option (b)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Multiple Choice Question 103 Oriole Construction is constructing an office building under contract for Cannon Company...
Multiple Choice Question 103 Oriole Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1100000 each quarter. The total contract price is $13200000 and Oriole estimates total costs of $17300000. Oriole estimates that the building will take 3 years to complete, and commences construction on January 2, 2018. At December 31, 2019, Oriole Construction estimates that it is 75% complete with the building; however,...
Novak Construction Company uses the percentage-of-completion method of accounting. In 2020, Novak began work under contract...
Novak Construction Company uses the percentage-of-completion method of accounting. In 2020, Novak began work under contract #E2-D2, which provided for a contract price of $2,170,000. Other details follow: 2020 2021 Costs incurred during the year $615,810 $1,422,000 Estimated costs to complete, as of December 31 963,190 –0– Billings during the year 426,000 2,170,000 Collections during the year 343,000 1,520,000 (a) New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. What...
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 $...
Wildhorse Construction Company uses the percentage-of-completion method of accounting. In 2020, Wildhorse began work under contract...
Wildhorse Construction Company uses the percentage-of-completion method of accounting. In 2020, Wildhorse began work under contract #E2-D2, which provided for a contract price of $2,165,000. Other details follow: 2020 2021 Costs incurred during the year $590,520 $1,409,000 Estimated costs to complete, as of December 31 1,005,480 –0– Billings during the year 428,000 2,165,000 Collections during the year 349,000 1,509,000 What portion of the total contract price would be recognized as revenue in 2020? In 2021? Revenue recognized in 2020 $...
Using Percentage-of-Completion and Completed Contract Methods Halsey Building Company signed a contract to build an office...
Using Percentage-of-Completion and Completed Contract Methods Halsey Building Company signed a contract to build an office building for $60,000,000. The scheduled construction costs follow. Year Cost 2016 $12,000,000 2017 18,000,000 2018 10,000,000 Total $40,000,000 The building is completed in 2018. For each year, compute the revenue, expense, and gross profit reported for this construction project using each of the following methods. a. Percentage-of-completion method 2016 2017 2018 Revenue $Answer $Answer $Answer Expense $Answer $Answer $Answer Gross Profit $Answer $Answer $Answer...
On June 15, 2020, Lion Construction signed a $ 360,000 contract to build a small building....
On June 15, 2020, Lion Construction signed a $ 360,000 contract to build a small building. Lion estimated that the total cost would be $ 320,000. Construction started immediately because the required completion date was August 31, 2021. Lion’s relevant data relating to this construction project were as follows:      2020             2021 Actual costs incurred $ 120,000      $ 204,000 Estimated costs to complete 200,000               -0- Progress billings 112,000        248,000 Collections 110,000        250,000 Instructions (show all supporting calculations) Calculate how much...
Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2018,...
Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2018, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,540,000. Curtiss concludes that the contract does not qualify for revenue recognition over time. The building was completed on December 31, 2020. Estimated percentage of completion, accumulated contract costs incurred,...
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...
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...
Ivanhoe Construction Company uses the percentage-of-completion method of accounting. In 2021, Ivanhoe began work on a...
Ivanhoe Construction Company uses the percentage-of-completion method of accounting. In 2021, Ivanhoe began work on a contract it had received which provided for a contract price of $39500000. Other details follow: 2021 Costs incurred during the year $18800000 Estimated costs to complete as of December 31 12800000 Billings during the year 17500000 Collections during the year 9700000 What should be the gross profit recognized in 2021? $7900000 $4700000 $20700000 $1566667
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT