Which statement is true concerning the completed contract method? a. Deferred revenue contains the amounts billed...
Which statement is true concerning the completed contract method?
| a. |
Deferred revenue contains the amounts billed to the customer |
|
| b. |
Production-in-progress contains the total amount spent on production costs |
|
| c. |
Revenue is recognized to the extent costs have been incurred |
|
| d. |
Customers are billed at the time the contract is completed |
Homework Answers
Under the completed contract method, revenues are recognized only upon the completion of the contract.
The answer is Option d.
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Which statement is true concerning the completed
contract method?
a.
Deferred revenue contains the amounts billed...
5. During Year 1, Gates Corp. started a construction job with a total contract price of $4,000,000. The job was com...
5. During Year 1, Gates Corp. started a construction job with a total contract price of $4,000,000. The job was completed on December 15, Year 2. Additional data are as follows: Year 1 Year 2 Actual costs incurred during the year $990,000 $1,200,000 Estimated remaining costs 1,210,000 Billed to customer 1,600,000 2,400,000 Received from customer 1,200,000 2,400,000 A. Prepare the journal entries necessary for Year 1 using the percentage of completion method. B. What amount of gross profit will be...
C) Compute the amount of gross profit to be recognized each year, assuming the completed-contract method...
C) Compute the amount of gross profit to be recognized
each year, assuming the completed-contract method is
used.
During 2017, Pearl Company started a construction job with a contract price of $1,610,000. The job was completed in 2019. The following information is available. Costs incurred to date Estimated costs to complete Billings to date Collections to date 2017 $434,300 575,700 301,000 271,000 2018 $859,560 242,440 897,000 817,000 2019 $1,073,000 -0- 1,610,000 1,428,000 Prepare all necessary journal entries for 2018. (Credit...
Exercise 18-36 Marin Construction Company uses the percentage of completion method of accounting in 2017, Marin...
Exercise 18-36 Marin Construction Company uses the percentage of completion method of accounting in 2017, Marin began work under contract E2-02, which provided for a contract price of 52,195,000. Other details follow 2017 2018 Costs incurred during the year 5695,310 $1,404,000 Estimated costs to complete, as of December 31921,690 0 Billings to date 426,000 2,195,000 Collections during the year 352,000 1,475,000 What portion of the total contract price would be recognized as revenue in 2017? In 2018? Revenue recognized in...
ABC Construction Inc. entered into a contract with a customer to build a movable storage facility...
ABC Construction Inc. entered into a contract with a customer to build a movable storage facility on January 1, 2020, for $1,200,000. ABC Construction Inc. owns the work in process and constructs this type of storage unit for a number of customers. The customer made a down payment of 10% of the project, with an additional 10% due at the end of year one and the remaining due when it takes control of the facility. The facility is expected to...
Exercise 18-36 Coronado Construction Company uses the percentage-of-completion method of accounting. In 2017, Coronado began work...
Exercise 18-36 Coronado Construction Company uses the percentage-of-completion method of accounting. In 2017, Coronado began work under contract #E2-D2, which provided for a contract price of $2,234,000. Other details follow: 2017 2018 Costs incurred during the year $615,980 $1,420,000 Estimated costs to complete, as of December 31 1,005,020 -0- Billings to date 413,000 2,234,000 Collections during the year 351,000 1,530,000 What portion of the total contract price would be recognized as revenue in 2017? In 2018? Revenue recognized in 2017...
Cheyenne Construction Company began work on a $424,000 construction contract in 2020. During 2020, Cheyenne incurred...
Cheyenne Construction Company began work on a $424,000
construction contract in 2020. During 2020, Cheyenne incurred costs
of $279,500, billed its customer for $204,500, and collected
$170,500. At December 31, 2020, the estimated additional costs to
complete the project total $150,500.
Prepare Cheyenne’s journal entry to record profit or loss, if any,
using (a) the percentage-of-completion method and (b) the
completed-contract method.
Cheyenne Construction Company began work on a $424.000 construction contract in 2020. During 2020, Cheyenne incurred costs of...
At the beginning of 2017, Culver Construction Company changed from the completed-contract method to recognizing revenue...
At the beginning of 2017, Culver Construction Company changed
from the completed-contract method to recognizing revenue over time
(percentage-of-completion) for financial reporting purposes. The
company will continue to use the completed-contract method for tax
purposes. For years prior to 2017, pretax income under the two
methods was as follows: percentage-of-completion $110,500, and
completed-contract $72,300. The tax rate is 30%.
Prepare Culver’s 2017 journal entry to record the change in
accounting principle. (Credit account titles are
automatically indented when amount is...
At the beginning of 2017, Stellar Construction Company changed from the completed-contract method to recognizing revenue...
At the beginning of 2017, Stellar Construction Company changed
from the completed-contract method to recognizing revenue over time
(percentage-of-completion) for financial reporting purposes. The
company will continue to use the completed-contract method for tax
purposes. For years prior to 2017, pretax income under the two
methods was as follows: percentage-of-completion $114,200, and
completed-contract $79,400. The tax rate is 40%.
Prepare Stellar’s 2017 journal entry to record the change in
accounting principle. (Credit account titles are
automatically indented when amount is...
During 2017, Nilsen Company started a construction job with a contract price of $1,600,000. The job...
During 2017, Nilsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2019. The following information is available. 2017 2018 2019 Costs incurred to date $400,000 $825,000 $1,070,000 Estimated costs to complete 600,000 275,000 –0– Billings to date 300,000 900,000 1,600,000 Collections to date 270,000 810,000 1,425,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2017 $ Gross profit recognized...
During 2020, Oriole Company started a construction job with a contract price of $1,590,000. The job...
During 2020, Oriole Company started a construction job with a contract price of $1,590,000. The job was completed in 2022. The following information is available. Costs incurred to date Estimated costs to complete Billings to date Collections to date 2020 $366,300 623,700 297,000 270,000 2021 $831,440 262,560 894,000 816,000 2022 $1,067,000 -0- 1,590,000 1,417,000 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...
5. During Year 1, Gates Corp. started a construction job with a total contract price of $4,000,000. The job was completed on December 15, Year 2. Additional data are as follows: Year 1 Year 2 Actual costs incurred during the year $990,000 $1,200,000 Estimated remaining costs 1,210,000 Billed to customer 1,600,000 2,400,000 Received from customer 1,200,000 2,400,000 A. Prepare the journal entries necessary for Year 1 using the percentage of completion method. B. What amount of gross profit will be...
C) Compute the amount of gross profit to be recognized
each year, assuming the completed-contract method is
used.
During 2017, Pearl Company started a construction job with a contract price of $1,610,000. The job was completed in 2019. The following information is available. Costs incurred to date Estimated costs to complete Billings to date Collections to date 2017 $434,300 575,700 301,000 271,000 2018 $859,560 242,440 897,000 817,000 2019 $1,073,000 -0- 1,610,000 1,428,000 Prepare all necessary journal entries for 2018. (Credit...
Exercise 18-36 Marin Construction Company uses the percentage of completion method of accounting in 2017, Marin began work under contract E2-02, which provided for a contract price of 52,195,000. Other details follow 2017 2018 Costs incurred during the year 5695,310 $1,404,000 Estimated costs to complete, as of December 31921,690 0 Billings to date 426,000 2,195,000 Collections during the year 352,000 1,475,000 What portion of the total contract price would be recognized as revenue in 2017? In 2018? Revenue recognized in...
Exercise 18-36 Coronado Construction Company uses the percentage-of-completion method of accounting. In 2017, Coronado began work under contract #E2-D2, which provided for a contract price of $2,234,000. Other details follow: 2017 2018 Costs incurred during the year $615,980 $1,420,000 Estimated costs to complete, as of December 31 1,005,020 -0- Billings to date 413,000 2,234,000 Collections during the year 351,000 1,530,000 What portion of the total contract price would be recognized as revenue in 2017? In 2018? Revenue recognized in 2017...
Cheyenne Construction Company began work on a $424,000
construction contract in 2020. During 2020, Cheyenne incurred costs
of $279,500, billed its customer for $204,500, and collected
$170,500. At December 31, 2020, the estimated additional costs to
complete the project total $150,500.
Prepare Cheyenne’s journal entry to record profit or loss, if any,
using (a) the percentage-of-completion method and (b) the
completed-contract method.
Cheyenne Construction Company began work on a $424.000 construction contract in 2020. During 2020, Cheyenne incurred costs of...
At the beginning of 2017, Culver Construction Company changed
from the completed-contract method to recognizing revenue over time
(percentage-of-completion) for financial reporting purposes. The
company will continue to use the completed-contract method for tax
purposes. For years prior to 2017, pretax income under the two
methods was as follows: percentage-of-completion $110,500, and
completed-contract $72,300. The tax rate is 30%.
Prepare Culver’s 2017 journal entry to record the change in
accounting principle. (Credit account titles are
automatically indented when amount is...
At the beginning of 2017, Stellar Construction Company changed
from the completed-contract method to recognizing revenue over time
(percentage-of-completion) for financial reporting purposes. The
company will continue to use the completed-contract method for tax
purposes. For years prior to 2017, pretax income under the two
methods was as follows: percentage-of-completion $114,200, and
completed-contract $79,400. The tax rate is 40%.
Prepare Stellar’s 2017 journal entry to record the change in
accounting principle. (Credit account titles are
automatically indented when amount is...
During 2020, Oriole Company started a construction job with a contract price of $1,590,000. The job was completed in 2022. The following information is available. Costs incurred to date Estimated costs to complete Billings to date Collections to date 2020 $366,300 623,700 297,000 270,000 2021 $831,440 262,560 894,000 816,000 2022 $1,067,000 -0- 1,590,000 1,417,000 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...
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