Question

Brady Construction Company contracted to build an apartment complex for a price of $6,700,000. Construction began in 2021 and was completed in 2023. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.

							Estimated Costs to Complete
	Costs Incurred During Year						(As of the End of the Year)
Situation	2021		2022		2023		2021		2022		2023
1	1,670		2,640		1,410		4,050		1,410		—
2	1,670		1,410		3,080		4,050		3,080		—
3	1,670		2,640		2,960		4,050		2,860		—
4	670		3,170		1,340		4,690		960		—
5	670		3,170		2,490		4,690		2,860		—
6	670		3,170		3,500		6,255		3,230		—

Required:
Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.)

Answer 1

Working notes

Situation	Cost incurred during the year (A)	Estimated costs to complete (B)	Total costs ( C) = (A +B)	% of completion D = A/C	Contract revenue E	Gross margin = (E ) - ( C)	Gross profit recognized (G ) = F X D
1	1,670,000	4,050,000	5,720,000	29.20%	6,700,000	980,000	286,119
2	1,670,000	4,050,000	5,720,000	29.20%	6,700,000	980,000	286,119
3	1,670,000	4,050,000	5,720,000	29.20%	6,700,000	980,000	286,119
4	670,000	4,690,000	5,360,000	12.50%	6,700,000	1,340,000	167,500
5	670,000	4,690,000	5,360,000	12.50%	6,700,000	1,340,000	167,500
6	670,000	6,255,000	6,925,000	9.68%	6,700,000	(225,000)	(21,769)

For year 2022

Situation	Cost incurred during the year (A)	Estimated costs to complete (B)	Total costs ( C) = (A +B)	% of completion D = A/C	Contract revenue E	Gross margin = (E ) - ( C)	Gross profit recognized (G ) = F X D	Gross profit already recognized (H)	Gross profit recognized I = G- H
1	4,310,000	1,410,000	5,720,000	75.35%	6,700,000	980,000	738,427	286,119	452,308
2	3,080,000	3,080,000	6,160,000	50.00%	6,700,000	540,000	270,000	286,119	(16,119)
3	4,310,000	2,860,000	7,170,000	60.11%	6,700,000	(470,000)	(282,524)	286,119	(568,643)
4	3,840,000	960,000	4,800,000	80.00%	6,700,000	1,900,000	1,520,000	167,500	1,352,500
5	3,840,000	2,860,000	6,700,000	57.31%	6,700,000	-	-	167,500	(167,500)
6	3,840,000	3,230,000	7,070,000	54.31%	6,700,000	(370,000)	(200,962)	(21,769)	(179,193)

*1670+2640

For last year

Situation	Cost incurred during the year (A)	Contract revenue ( B)	Gross margin to be recognized ( C) = B - A	Gross profit recognized in 2021 D	Gross profit recognized in 2022 E	Total Gross profit recognized till date F = D + E	Gross profit recognized in 2023 G = C - F
1	5,720,000	6,700,000	980,000	286,119	452,308	738,427	241,573
2	6,160,000	6,700,000	540,000	286,119	(16,119)	270,000	270,000
3	7,270,000	6,700,000	(570,000)	286,119	(568,643)	(282,524)	(287,476)
4	5,180,000	6,700,000	1,520,000	167,500	1,352,500	1,520,000	-
5	6,330,000	6,700,000	370,000	167,500	(167,500)	-	370,000
6	7,340,000	6,700,000	(640,000)	(21,769)	(179,193)	(200,962)	(439,038)

The requirement

	Revenue recognized over time			Revenue recognized upon completion
Situation	2,021	2,022	2,023	2021	2,022	2,023
1	286,119	452,308	241,573	0	-	980,000
2	286,119	(16,119)	270,000	0	-	540,000
3	286,119	(568,643)	(287,476)	0	(179,193)	(390,807)
4	167,500	1,352,500	-	0		1,520,000
5	167,500	(167,500)	370,000	0		370,000
6	(21,769)	(179,193)	(439,038)	(21,769)	(179,193)	(439,038)