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Part 1 | ||||
2021 | 2022 | 2023 | ||
Contract price | $ 8,240,000 | $ 8,240,000 | $ 8,240,000 | |
Actual costs to date | $ 2,080,000 | $ 4,660,000 | $ 8,540,000 | |
Estimated costs to complete | $ 4,080,000 | $ 3,720,000 | $ - | |
Total estimated costs | $ 6,160,000 | $ 8,380,000 | $ 8,540,000 | |
Estimated gross profit | ||||
(actual in 2020) | $ 2,080,000 | $ -140,000 | $ -300,000 | |
Revenue Recognition: | 33.77% | 55.61% | ||
2021 | $2,080,000/$6,160,000 | = 33.77% x $8,240,000 | $ 2,782,338 | |
2022 | $4,660,000/$8,380,000 | = 55.61% x $8,240,000 = $4,582,148 – 2,782,338 | $ 1,799,810 | |
2023 | $8,240,000-$2,782,338-$1,799,810 | $ 3,657,852 | ||
Gross profit (loss) recognized: | ||||
2021 | $2,782,338-$2,080,000 | $ 702,338 | ||
2022 | ($140,000)-$702,338 | $ (842,338) | ||
2023 | ($300,000)-($140,000) | $ -160,000 | ||
Part 2a and 2b | ||||
Year 2021 | Year 2022 | |||
Construction in Progress | $ 2,080,000 | $ 2,580,000 | ||
Various Accounts | $ 2,080,000 | $ 2,580,000 | ||
Accounts Receivable | $ 2,580,000 | $ 2,830,000 | ||
Billing on Construction Contracts | $ 2,580,000 | $ 2,830,000 | ||
Cash | $ 2,330,000 | $ 2,555,000 | ||
Accounts Receivable | $ 2,330,000 | $ 2,555,000 | ||
Cost of Construction | $ 702,338 | |||
Construction in progress | $ 2,080,000 | |||
Revenue from long term contracts | $ 2,782,338 | |||
Cost of Construction | $ 2,642,148 | |||
Revenue from long term contracts | $ 1,799,810 | |||
Construction in progress | $ 842,338 | |||
Requirement 3a and 3b | ||||
Year 2021 | Year 2022 | |||
Current Assets: | ||||
Accounts Receivable | $ 250,000 | $ 525,000 | ||
Costs and Profit $2,782,338 in excess of billing $2,580,000 | $ 202,338 | |||
Current Liabilities: | ||||
Billings $5,410,000 in excess of costs less loss | $ 890,000 | |||
($4,660,000-$140,000)=$4,520,000 |
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 $8,240,000. During 2021, costs of $2,080,000 were incurred with estimated costs of $4,080,000 yet to be incurred. Billings of $2,580,000 were sent, and cash collected was $2,330,000. In 2022, costs incurred were $2,580,000 with remaining costs estimated to be $3,720,000. 2022 billings were $2,830,000 and $2,555,000 cash was collected. The project was completed in 2023 after additional costs of...
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,240,000. During 2021, costs of $2,080,000 were incurred with estimated costs of $4,080,000 yet to be incurred. Billings of $2,580,000 were sent, and cash collected was $2.330,000. In 2022, costs incurred were $2,580,000 with remaining costs estimated to be $3,720,000. 2022 billings were $2.830,000 and $2,555,000 cash was collected. The project was completed in 2023 after additional costs of...
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On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,120,000. During 2021, costs of $2,040,000 were incurred with estimated costs of $4,040,000 yet to be incurred. Billings of $2,540,000 were sent, and cash collected was $2,290,000. In 2022, costs incurred were $2,540,000 with remaining costs estimated to be $3,660,000. 2022 billings were $2,790,000 and $2,515,000 cash was collected. The project was completed in 2023 after additional costs of...
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