Business, 14.03.2020 02:57 gjvyverman
On February 1, 2016, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,375,000. During 2016, costs of $2,150,000 were incurred, with estimated costs of $4,150,000 yet to be incurred. Billings of $2,680,000 were sent and cash collected was $2,400,000.
In 2017, costs incurred were $2,680,000 with remaining costs estimated to be $3,825,000. 2017 billings were $2,930,000, and $2,625,000 cash was collected. The project was completed in 2018 after additional costs of $3,950,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time.
Required:
1.
Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years
Year Revenue Recongized Gross Profit (Loss)
Recognized
2016
2017
2018
Total
2-a.
Prepare journal entries for 2016 to record the transactions described (credit "various accounts" for construction costs incurred). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1.Record the construction costs.
2.Record the progress billings.
3.Record the cash collections.
4.Record the expected loss.
2-b.
Prepare journal entries fo 2017 to record the transactions described (credit "various accounts" for construction costs incurred). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1.Record the construction costs.
2.Record the progress billings.
3.Record the cash collections.
4.Record the expected loss.
3-a.
Prepare a partial balance sheet to show the presentation of the project as of December 31, 2016. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
Balance Sheet
At December 31, 2016
Current Assets
Current Liabilities
3-b.
Prepare a partial balance sheet to show the presentation of the project as of December 31, 2017. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
Balance Sheet
At December 31, 2016
Current Assets
Current Liabilities
Answers: 3
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