Homework Answers
Solution a & b:
| Computation of % of completion, revenue recognition and Gross Profit - Penner builders | ||||||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) |
Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) (G - A) |
| 2012 | $2,700,000 | $2,700,000 | $13,500,000 | 20.00% | $21,000,000 | $4,200,000 | $4,200,000 | $1,500,000 |
| 2013 | $5,100,000 | $7,800,000 | $15,000,000 | 52.00% | $21,000,000 | $10,920,000 | $6,720,000 | $1,620,000 |
Solution c:
| Journal Entries - Penner Builders | |||
| Event | Particulars | Debit | Credit |
| 1 | Construction in Progress Dr | $1,620,000.00 | |
| Cost of construction Dr | $5,100,000.00 | ||
| To Revenue from long term contracts | $6,720,000.00 | ||
| (To record revenue and gross profit) | |||
Add Answer to:
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building for $7680000. Construction began in 2021 and was completed
in 2022. Data relating to the contract are summarized
below:
Year ended
December 31,
2021
2022
Costs incurred
$3135000
$2340000
Estimated costs to complete
2090000
0
Wildhorse uses the percentage-of-completion method as the basis for
income recognition. For the years ended December 31, 2021, and
2022, respectively, Wildhorse should report gross profit of
$1323000 and $882000.
$4545000 and $3135000.
$1473000 and $732000.
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2022
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