Required information
[The following information applies to the questions
displayed below.]
Beavis Construction Company was the low bidder on a construction
project to build an earthen dam for $1,750,000. The project was
begun in 2017 and completed in 2018. Cost and other data are
presented below:
2017 | 2018 | |||||
Costs incurred during the year | $ | 469,000 | $ | 1,050,000 | ||
Estimated costs to complete | 871,000 | 0 | ||||
Billings during the year | 480,000 | 1,270,000 | ||||
Cash collections during the year | 380,000 | 1,425,000 | ||||
Assume that Beavis recognizes revenue on this contract over time
according to percentage of completion.
Required:
Compute the amount of gross profit recognized during 2017 and
2018.
Amount of gross profit recognized in 2017 ____
Amount of gross profit recognized in 2018 ____
Gross profit = [(costs to date / estimated total costs * expected profit) - previously recognized profits.
Costs to date in 2017 = 469,000
Estimated total costs in 2017 = 469,000 + 871,000 = 1,340,000
Expected profit in 2017 = 1,750,000 - 1,340,000 = 410,000
Previously recognized profit in 2017 = 0
Gross profit in 2017 = [(469,000 / 1,340,000 * 410,000) - 0] = 143,500
Costs to date in 2018 = 469,000 + 1,050,000 = 1,519,000
Estimated total costs in 2018 = 1,519,000
Expected profit in 2018 = 231,000
Previously recognized profit in 2017 = 143,500
Gross profit in 2018 = [(1,519,000 / 1,519,000 * 231,000) - 143,500] = 87,500
Required information [The following information applies to the questions displayed below.] Beavis Construction Company was the...
Required information [The following information applies to the questions displayed below.] Beavis Construction Company was the low bidder on a construction project to build an earthen dam for $1,750,000. The project was begun in 2017 and completed in 2018. Cost and other data are presented below: 2017 2018 Costs incurred during the year $ 469,000 $ 1,050,000 Estimated costs to complete 871,000 0 Billings during the year 480,000 1,270,000 Cash collections during the year 380,000 1,425,000 Assume that Beavis recognizes...
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