Question

QUESTION 5 Not yet answered Marked out of 1.00 Flag question Percentage-of-Completion and Completed Contract Methods Philbrick Company signed a three-year contract to provide sales training to the employees of Elliot Company. The contract price is $1,200 per employee and the estimated number of employees to be trained is 400. The expected number to be trained in each year and the expected training costs follow Number of Training Costs Employees Incurred 2016 125 $60,000 2017 200 75,000 40,000 75 2018 400 175,000 Total Required For each year, compute the revenue, expense, and gross profit reported assuming revenue is recognized using the following method (Do not round until your final answers. Round your answers to two decimal places.) 1. Percentage-of-completion method, where percentage-of-completion is determined by the number of employees trained Expense Gross Profit Revenue 2016 S 2017 $ 2018 S Total 2. Percentage-of-completion method, where percentage-of-completion is determined by the costs incurred. Revenue Expense Gross Profit 2016 2017 $ 2018 Total 3. Completed contract method. Revenue Expense Gross Profit 2016 $ 2017 $ 2018 $ Total $

Answer 1

Solution: Part 1: Gross profit Revenue Expense 2016 95,312.50 150,000.0054,687.50 2017 152,500.00 240,000.00 87,500.00 2018 57,187.50 90,000.0032,812.50 305,000.00 480,000.00 175,000.00 Working Employees trained% trained Revenue Gross profit Expense b-a/400 c-b*1200* 400 d-b*175000 e-c-d 125 2016 31.25% 150,000.00| 54,687.50| 95,312.50 2017 50.00% 240,000.00 87,500.00 | 152,500.00 200 2018 18.75% 75 90,000.0032,812.5057,187.50 400 480,000.00 175,000.00305,000.00 Part 2: Revenue Expense Gross profit 2016 2017 305,000.00 2018 480,000.00 175,000.00 480,000.00| 175,000.00305,000.00