Question

Swifty Construction Company has entered into a contract beginning January 1, 2017, to build a parking complex. It has been estimated that the complex will cost $606,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $896,000. The following data pertain to the construction period. 2019 Costs to date Estimated costs to complete Progress billings to date Cash collected to date 2017 $266,640 339,360 270,000 240,000 2018 $412,080 193,920 545,000 495,000 $617,000 -0- 896,000 896,000 (a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is o, please enter 0. Do not leave any fields blank.) Gross profit recognized in 2017 Gross profit recognized in 2018 Gross profit recognized in 2019 (b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is o, please enter 0. Do not leave any fields blank.) Gross profit recognized in 2017 Gross profit recognized in 2018 Gross profit recognized in 2019 Click if you would like to Show Work for this question: Open Show Work

Answer 1

Andwer'- a) Gross profit -percentoge of Completion Meltiod !- 2019 2017 2018 $266, 640 |$412,080 $ 617,000 cost to date @) Estimatid cost to complete 6) $339,360 $193,920 Trotol Estimaad cost to Completec=(att)$ 606,000 $606,000 $ 617,000 Prcentage of Completion dea/e 44% 68% 100% Total contract value (e) $896,000 $896000 $896,000 $ 394,240 $609,280 $896,000 Revenue to be loses re congised till dote ff =dxe) Grots Profit tilldale =(f-a) Gross profit for the year s 127,600 $197,200 $279, 000 $12.7,600 $ 69,60o $81.800 197.200-)27,000- 127,600 197200) LOC 6 Gross profit -cCompleted Contraet Method: 2017 2018 2019 Gross profit (876,000-617,000 $279,000