During 2020, Martinez Company started a construction job with a contract price of $1,600,000. The job was completed in 2022. The following information is available.
2020 |
2021 |
2022 |
||||
---|---|---|---|---|---|---|
Costs incurred to date |
$405,900 | $830,680 | $1,074,000 | |||
Estimated costs to complete |
584,100 | 262,320 | –0– | |||
Billings to date |
302,000 | 898,000 | 1,600,000 | |||
Collections to date |
272,000 | 818,000 | 1,420,000 |
Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.
Gross profit recognized in 2020 |
||
---|---|---|
Gross profit recognized in 2021 |
||
Gross profit recognized in 2022 |
|
Answers
2020 |
2021 |
2022 |
|
Gross Profits (Loss) |
$250,100 |
$135,220 |
$140,680 |
Working |
2020 |
2021 |
2022 |
|
A |
Contract Price |
$1,600,000 |
$1,600,000 |
$1,600,000 |
B |
Cost Incurred to Date |
$405,900 |
$830,680 |
$1,074,000 |
C |
Estimated cost yet to be incurred to complete the contract |
$584,100 |
$262,320 |
$0 |
D = B+C |
Total Cost |
$990,000 |
$1,093,000 |
$1,074,000 |
E = (B/D) x 100 |
% of Completion |
41.00% |
76.00% |
100.00% |
F = A x E |
Revenue to date |
$656,000 |
$1,216,000 |
$1,600,000 |
G |
Revenue of Previous year |
$0 |
$656,000 |
$1,216,000 |
H = F - G |
Net Revenue this year |
$656,000 |
$560,000 |
$384,000 |
I (=B) |
Cost to date |
$405,900 |
$830,680 |
$1,074,000 |
J |
Cost to date of previous year |
$0 |
$405,900 |
$830,680 |
K = I - J |
Net Cost for the year |
$405,900 |
$424,780 |
$243,320 |
L = H - K |
Gross Profits |
$250,100 |
$135,220 |
$140,680 |
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