Question

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 the journal entry to recognize revenue in 2019 using the percentage of completion method.

Homework Answers

Answer #1
Cost (In million) ($) Accumulated cost
2018 4 4
2019 3 7
2020(Estimated) 3.5 10.5
Total 10.5
Percentage of completion in 2019 = Accumulated cost / Total cost
(7 / 10.5)
66.67%
(In million) ($)
Revenue to booked in 2019 = Contract price * Percentage of completion in 2019
(12.8*66.67%)
8.53
Journal Entries (In million) ($) (In million) ($)
Particulars Debit Credit
1 Accounts recievable 8.53
To Contract revenue a/c 8.53

I have explained everything step by step.

Go through it once and everything will be cleared.

Hope you understand the concept

Please give positive feedback by giving thumsup

Thankyou

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
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...
In 2018, Omega Construction began work on a contract with a price of $850,000 and estimated...
In 2018, Omega Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the contract are as follows: ​ ​ 2018 2019 2020 Costs incurred during the year $238,000 $319,600 $105,000 Estimated costs to complete 357,000 139,400 -0- Partial billings 260,000 210,000 380,000 Collections 240,000 200,000 410,000 Assuming the performance obligation is satisfied over time, what would be the gross profit in 2018? Group of answer choices $255,000 $425,000...
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...
Indiana Co. began a construction project in 2018 with a contract price of $162 million to...
Indiana Co. began a construction project in 2018 with a contract price of $162 million to be received when the project is completed in 2020. During 2018 Indiana Incurred $32 million of costs and estimates and additional $85 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed. Supposed that in 2019, Indiana Incurred additional costs of $63 million...
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 June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball...
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $330 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): 2018 2019 2020 Costs incurred during the year $ 90 $ 70 $ 45 Estimated costs to complete as of...
During 2019, Almon Inc. started a construction job with a contract price of $8000. The job...
During 2019, Almon Inc. started a construction job with a contract price of $8000. The job was completed in 2019 and information for the three years of construction is as follows: 2019 2020 2021 TOTAL costs incurred to date (ie sum of all costs, for all years, incurred at the end of the year) $2,000 $4,500 $7,600 Estimated costs to complete (as estimated at year end) 5,000 2900 -0- Billings to date 2,200 6,000 8,000 Collections to date 1,600 4,800...
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...
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...
Kiner, Inc. began work in 2018 on a contract for €21,000,000. Other data are as follows:...
Kiner, Inc. began work in 2018 on a contract for €21,000,000. Other data are as follows: 2018     2019 Costs incurred to date €9,000,000 €14,000,000 Estimated costs to complete 6,000,000 — Billings to date 7,000,000 21,000,000 Collections to date 5,000,000 18,000,000 8. If Kiner uses the percentage-of-completion method, the gross profit to be recognized in 2018 is A. €3,600,000. B. €4,000,000. C. €5,400,000. D. €6,000,000. 9. If Kiner uses the cost-recovery method, the gross profit to be recognized in 2019 is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT