XYZ Co. received a contract for $3,620,000 in 2014 to build a parking deck for a
ID: 2425768 • Letter: X
Question
XYZ Co. received a contract for $3,620,000 in 2014 to build a parking deck for a university. The following data was accumulated during the construction period:
Contract Price: 3,620,000(2014) 3,780,000 (2015) 3,780,000 (2016)
Cost to Date: 950,000 (2014) 1,731,000 (2015) 3,694,000 (2016)
Estimated Costs to Complete: 2,500,000 (2014) 1,942,000 (2015) 0 (2016)
Progress Billings During the Year: 900,000 (2014) 962,000 (2015) 1,918,000 (2016)
Cash Collected During the Year: 750,000 (2014) 985,000 (2015) 1,980,000 (2016)
Note: The contract price was increased in 2015 & XYZ Co. qualifies to use the percent-of-completion method of accounting for long-term contract.
a. Calculate the revenue earned (not income) by XYZ Co. for each of the years.
b. Journalize the entries for each of the years.
c. Prepare a partial balance sheet & income statement for each of the years indicating where accounts appear.
Explanation / Answer
* = > 3780000 - 1776600 => $ 2003400
Answer b
Journal Entriues
2014
Construction in ProcessA/c dr. $950000
To Material etc A/c cr. $950000
Accounts Receivable A/c Dr.$ 900000
To Billin on Construction in proces A/c cr. $900000
Cash A/c Dr. $750000
To Accounts Receivable A/c Cr. $750000
2015
Construction in ProcessA/c dr. $1731000
To Material etc A/c cr. $1731000
Accounts Receivable A/c Dr.$ 962000
To Billin on Construction in proces A/c cr. $962000
Cash A/c Dr. $985000
To Accounts Receivable A/c Cr. $985000
2016
2014
Construction in ProcessA/c dr. $3694000
To Material etc A/c cr. $3694000
Accounts Receivable A/c Dr.$ 1918000
To Billin on Construction in proces A/c cr. $1918000
Cash A/c Dr. $1980000
To Accounts Receivable A/c Cr. $1980000
2014 2015 2016 Cost to Date (a) 950,000 1,731,000 3,694,000 Estimated Costs to Complete (b) 2,500,000 1,942,000 0 TOTAL COSTS (c) 3450000 3673000 3694000 Percentage of Work Completed (a) / (c) = (d) 28% 47% 100% Contract Price (e) 3,620,000 3,780,000 3,780,000 Revenuce Recognised (d) * (e) 1013600 1776600 2003400*Related Questions
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