Brady Construction Company contracted to build an apartment complex for a price

Question

Brady Construction Company contracted to build an apartment complex for a price of $6,600,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Estimated Costs to Complete (As of the End of the Year) Costs Incurred During Year 10 1,380 2 1,660 1,380 3,040 3,990 3,040 3 1660 2,610 2,880 3,990 2,780 4 660 3,160 1,320 4,620 955 5 660 3,160 2,420 4,620 2,780 6 660 3,160 3,400 6,155 3,140 660 380 Required: Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.

Explanation / Answer

Solution:

Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 1) 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) 2018 $1,660,000 $1,660,000 $5,650,000 29.38% $6,600,000 $1,939,115 $1,939,115 $279,115 2019 $2,610,000 $4,270,000 $5,650,000 75.58% $6,600,000 $4,987,965 $3,048,850 $438,850 2020 $1,380,000 $5,650,000 $5,650,000 100.00% $6,600,000 $6,600,000 $1,612,035 $232,035

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