Homework Answers
| Year | Cost Incurred | Further Cost Estimated | Total Cost | % of completion | Amount Received till date | Amount of Revenue | Provision for Loss |
| 2021 | $ 20,00,000.00 | $ 40,00,000.00 | $ 60,00,000.00 | 33.33333333 | $ 22,50,000.00 | $ 26,66,666.67 | $ - |
| 2022 | $ 45,00,000.00 | $ 36,00,000.00 | $ 81,00,000.00 | 55.55555556 | $ 47,25,000.00 | $ 44,44,444.44 | $ 1,00,000.00 |
| 2023 | $ 83,00,000.00 | $ - | $ 83,00,000.00 | 100 | $ 32,75,000.00 | $ 80,00,000.00 |
| 2021 | |||
| To date | Recognized Prior | Recognized in 2021 | |
| Construction Revenue | $ 26,66,666.67 | $ - | $ 26,66,666.67 |
| Construction Expense | $ 20,00,000.00 | $ - | $ 20,00,000.00 |
| Gross Profit /loss | $ 6,66,666.67 | $ - | $ 6,66,666.67 |
| 2022 | |||
| To date | Recognized Prior | Recognized in 2022 | |
| Construction Revenue | $ 44,44,444.44 | $ 26,66,666.67 | $ 17,77,777.78 |
| Construction Expense | $ 45,00,000.00 | $ 20,00,000.00 | $ 25,00,000.00 |
| Gross Profit /loss | $ -55,555.56 | $ 6,66,666.67 | $ -7,22,222.22 |
| 2023 | |||
| To date | Recognized Prior | Recognized in 2023 | |
| Construction Revenue | $ 80,00,000.00 | $ 44,44,444.44 | $ 35,55,555.56 |
| Construction Expense | $ 83,00,000.00 | $ 45,00,000.00 | $ 38,00,000.00 |
| Gross Profit /loss | $ -3,00,000.00 | $ -55,555.56 | $ -2,44,444.44 |
2A)
Journal Entries in the year 2021
No loss need to recognized Immediately as the Cost expected is with in the invoice value
Invoice value (-) Total Cost = $80,00,000 - $ 60,00,000= profit $20,00,000
| Year 2021 | ||||
| Construction In Progress | Dr | 20,00,000.00 | ||
| To Cash A/c | $ 20,00,000.00 | |||
| ( Being Amount of the Expenses Incurred for the construction) | ||||
| Accounts receivable | Dr | $ 26,66,666.67 | ||
| To Billings on construction contract | $ 26,66,666.67 | |||
| ( being the amount of receivable on % completion basis to be received) | ||||
| Cash | Dr | 22,50,000.00 | ||
| To Accounts receivable | $ 22,50,000.00 | |||
| ( being the amount of received During The year) | ||||
| Billings on construction contract A/c | Dr | $ 26,66,666.67 | ||
| To Contract Revenue | $ 26,66,666.67 | |||
| ( being the amount of Revenue Transfer th construction A/c) | ||||
| Contract Revenue A/c | Dr | $ 26,66,666.67 | ||
| To Construction In Progress | $ 20,00,000.00 | |||
| To Gross Profit | $ 6,66,666.67 | |||
| ( being Gross Profit Recognized) |
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