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Solution 1:
Computation of % of completion, revenue recognition and Gross Profit - Stellar Company | ||||||||
Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) |
Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) (G-A) |
2020 | $373,700 | $373,700 | $1,010,000 | 37.00% | $1,620,000 | $599,400 | $599,400 | $225,700 |
2021 | $375,660 | $749,360 | $1,102,000 | 68.00% | $1,620,000 | $1,101,600 | $502,200 | $126,540 |
2022 | $320,640 | $1,070,000 | $1,070,000 | 100.00% | $1,620,000 | $1,620,000 | $518,400 | $197,760 |
Solution 2:
Journal Entries - Stellar Company | |||
Event | Particulars | Debit | Credit |
1 | Construction in Progress Dr | $375,660.00 | |
To Various Accounts | $375,660.00 | ||
(To record construction cost incurred) | |||
2 | Accounts receivables Dr | $605,000.00 | |
To Billings on construction contract | $605,000.00 | ||
(To record progress billings) | |||
3 | Cash Dr | $547,000.00 | |
To Accounts receivables | $547,000.00 | ||
(To record collection from customer) | |||
4 | Construction in Progress Dr | $375,660.00 | |
Cost of construction Dr | $126,540.00 | ||
To Revenue from long term contracts | $502,200.00 | ||
(To record revenue and gross profit) |
Solution 3:
Computation of Gross Profit - Revenue on completion -Stellar Company | |||||
Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
2020 | $373,700 | $373,700 | $1,010,000 | $1,620,000 | $0 |
2021 | $375,660 | $749,360 | $1,102,000 | $1,620,000 | $0 |
2022 | $320,640 | $1,070,000 | $1,070,000 | $1,620,000 | $550,000.00 |
During 2020, Stellar Company started a construction job with a contract price of $1,620,000. The job...
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2020
2021
2022
Costs incurred to date
$396,000
$806,600
$1,080,000
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594,000
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–0–
Billings to date
301,000
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Gross profit recognized in 2020
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Estimated costs to complete
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Billings to date
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Collections to date
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Compute the amount of gross profit to be recognized each year,
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Gross profit recognized in 2020
$enter a dollar amountenter...
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