Homework Answers
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| Arrow Construction Company | ||||
| Ans to 1 | Calculation of Gross Profit | |||
| Particulars | 2018 | 2019 | 2020 | Note |
| Contract Price | 8,180,000 | 8,180,000 | 8,180,000 | A |
| Cost Incurred during the year | 2,060,000 | 2,560,000 | 3,860,000 | B |
| Estimated cost to complete | 4,060,000 | 3,690,000 | - | C |
| Cost Incurred to date | 2,060,000 | 4,620,000 | 8,480,000 | D |
| (Sum total of the cost incurred during the year) | ||||
| Estimated total cost | 6,120,000 | 8,310,000 | 8,480,000 | E=C+D |
| Percentage complete | 33.66% | 55.60% | 100.00% | F=D/E |
| (Cost Incurred to date/Estimated total cost) | ||||
| Revenue to be recognized | 2,753,399 | 1,794,327 | 3,632,274 | G |
| (Contract Price*Percentage complete)- revenue previously recognized | ||||
| Year 2018: 33.66% completed. Revenue recognized = 33.66% x $ 8,180,000 = $ 2,753,399. | ||||
| Year 2019: 55.60% completed. Revenue recognized = 55.60% x $ 8,180,000 – $ 2,753,399 (previously recognized) = $ 1,794,327. | ||||
| Year 2020: 100% completed. Revenue recognized = 100% x $ 8,180,000 – $ 2,753,399- $ 1,794,327 (previously recognized) = $ 3,632,274. | ||||
| Gross Profit/(Loss) | 693,399 | (765,673) | (227,726) | H=G-B |
| Billings during the year | 2,560,000 | 2,810,000.00 | ||
| Collection during the year | 2,310,000 | 2,535,000.00 |
| 2018 | 2019 | |||||
| Ans to 2a and 2b | Journal Entries | Debit $ | Credit $ | Debit $ | Credit $ | |
| Costs Incurred | CIP (Work-in-progress) | 2,060,000 | 2,560,000 | |||
| Cash | 2,060,000 | 2,560,000 | ||||
| Billing | Accounts Receivable | 2,560,000 | 2,810,000 | |||
| Billing on CIP | 2,560,000 | 2,810,000 | ||||
| Receiving Payments | Cash | 2,310,000 | 2,535,000 | |||
| Accounts Receivable | 2,310,000 | 2,535,000 | ||||
| Period end adjustments for Revenue | Construction Expense | 2,060,000 | ||||
| (Gross Profit entry) | CIP (Work-in-progress) | 693,399 | ||||
| Construction Revenue | 2,753,399 | |||||
| Period end adjustments for Revenue | Construction Expense | 2,560,000 | ||||
| (Gross Profit entry) | CIP (Work-in-progress) | 765,673 | ||||
| Construction Revenue | 1,794,327 |
| Workings for Balance Sheet | |||||
| Ans to 3a and 3b | CIP (Work-in-progress) | ||||
| Balance Sheet (Partial) | 2018 | 2019 | Account | Amount ($) | |
| Current Assets: | Cash | 2,060,000 | |||
| CIP (Work-in-progress) | 2,753,399 | 4,547,726 | Construction Revenue | 693,399 | |
| Accounts Receivable | 250,000 | 525,000 | Balance at the end of 2018 | 2,753,399 | |
| 3,003,399 | 5,072,726 | Cash | 2,560,000 | ||
| Current Liabilities: | Construction Revenue | (765,673) | |||
| Billing on CIP | 2,560,000.00 | 5,370,000.00 | Balance at the end of 2019 | 4,547,726 | |
| 2,560,000.00 | 5,370,000.00 | ||||
| Accounts Receivable | |||||
| Account | Amount ($) | ||||
| Billing on CIP | 2,560,000 | ||||
| Cash | (2,310,000) | ||||
| Balance at the end of 2018 | 250,000 | ||||
| Billing on CIP | 2,810,000 | ||||
| Cash | (2,535,000) | ||||
| Balance at the end of 2019 | 525,000 | ||||
| Billing on CIP | |||||
| Account | Amount ($) | ||||
| Accounts Receivable | 2,560,000 | ||||
| Balance at the end of 2018 | 2,560,000 | ||||
| Accounts Receivable | 2,810,000 | ||||
| Balance at the end of 2019 | 5,370,000 |
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On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,060,000. During 2018, costs of $2,020,000 were incurred with
estimated costs of $4,020,000 yet to be incurred. Billings of
$2,520,000 were sent, and cash collected was $2,270,000.
In 2019, costs incurred were $2,520,000 with remaining costs
estimated to be $3,630,000. 2019 billings were $2,770,000 and
$2,495,000 cash was collected. The project was completed in 2020
after additional costs of...
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,125,000. During 2018, costs of $2,050,000 were incurred, with
estimated costs of $4,050,000 yet to be incurred. Billings of
$2,560,000 were sent, and cash collected was $2,300,000. In 2019,
costs incurred were $2,560,000 with remaining costs estimated to be
$3,675,000. 2019 billings were $2,810,000, and $2,525,000 cash was
collected. The project was completed in 2020 after additional costs
of...
I am lost. This all that I have so far...... On February 1, 2018, Arrow Construction...
I am lost. This all that I have so far......
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,060,000. During 2018, costs of $2,020,000 were incurred with estimated costs of $4,020,000 yet to be incurred. Billings of $2,520,000 were sent, and cash collected was $2,270,000. In 2019, costs incurred were $2,520,000 with remaining costs estimated to be $3,630,000. 2019 billings were $2,770,000 and $2,495,000 cash was collected....
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it says it's incomplete, please help
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,600,000. During 2018, costs of $2,200,000 were incurred with estimated costs of $4,200,000 yet to be incurred. Billings of $2,700,000 were sent, and cash collected was $2,450,000. In 2019, costs incurred were $2,700,000 with remaining costs estimated to be $3,900,000. 2019 billings were $2,950,000 and $2,675,000 cash was collected. The project was completed...
Exercise 6-21 (Algo) Long-term contract; revenue recognition over time; loss projected on entire project (LO6-9) On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,270,000. During 2021, costs of $2,090,000 were incurred with estimated costs of $4,090,000 yet to be incurred. Billings of $2,590,000 were sent, and cash collected was $2,340,000. points eBook In 2022, costs incurred were $2,590,000 with remaining costs estimated to be $3,735,000. 2022 billings...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,060,000. During 2018, costs of $2,020,000 were incurred with
estimated costs of $4,020,000 yet to be incurred. Billings of
$2,520,000 were sent, and cash collected was $2,270,000.
In 2019, costs incurred were $2,520,000 with remaining costs
estimated to be $3,630,000. 2019 billings were $2,770,000 and
$2,495,000 cash was collected. The project was completed in 2020
after additional costs of...
On February 1, 2018, Arrow Construction Company entered into a
three-year construction contract to build a bridge for a price of
$8,125,000. During 2018, costs of $2,050,000 were incurred, with
estimated costs of $4,050,000 yet to be incurred. Billings of
$2,560,000 were sent, and cash collected was $2,300,000. In 2019,
costs incurred were $2,560,000 with remaining costs estimated to be
$3,675,000. 2019 billings were $2,810,000, and $2,525,000 cash was
collected. The project was completed in 2020 after additional costs
of...
I am lost. This all that I have so far......
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,060,000. During 2018, costs of $2,020,000 were incurred with estimated costs of $4,020,000 yet to be incurred. Billings of $2,520,000 were sent, and cash collected was $2,270,000. In 2019, costs incurred were $2,520,000 with remaining costs estimated to be $3,630,000. 2019 billings were $2,770,000 and $2,495,000 cash was collected....
Saved Help Save & Exit Submit Exercise 6-21 (Algo) Long-term contract; revenue recognition over time; loss projected on entire project (LO6-9) On February 1, 2021, Arrow Construction Company entered into a three year construction contract to build a bridge for a price of $8,390,000. During 2021, costs of $2.130,000 were incurred with estimated costs of $4,130,000 yet to be incurred. Billings of $2,630,000 were sent, and cash collected was $2,380,000. In 2022, costs incurred were $2,630,000 with remaining costs estimated...
Exercise 5-18 Long-term contract; revenue recognition over time vs. upon project completion [LO5-9] On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington D.С., for $270 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): 2018 2019 2020 $ 50 $100 60...
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