Electric Boat, Inc., of New London, Connecticut, began operation on the construc
ID: 2469251 • Letter: E
Question
Electric Boat, Inc., of New London, Connecticut, began operation on the construction of a new deep sea discovery submarine for the US Navy. On January 2, 2016, and entered into a contract. This project was signed for the contract price was $6,000,000 and provided for penalties of $100,000 per week for late completion. Although during 2016 the project had been on schedule for timely completion, it was completed four weeks late on August 31, 2017. The following data pertains to the separate long-term construction projects in progress:
Additional information
>> Electric Boat accounts for its long-term construction contracts using the percentage-of- completion method.
What amounts should Electric Boat's gross profit (loss) be recognized for the years ended
December 31, 2016, and 2017, under the percentage-of-completion method.
As of December 31, 2016:
Costs incurred to date
$2,400,000
Estimated costs to complete
600,000
Billings on 12/31/16
3,150,000
Cash collection on 12/31/16
2,550,000
As of August 31, 2017:
Costs incurred to date
3,000,000
Estimated costs to complete
0
Billing on 8/31/17
2,450,000
Cash collection 8/31/17
3,050,000
Explanation / Answer
Ans-
% of competion Method S.No. Detail 2016 2017 1 Cost incurred during the year 2,400,000.00 600,000.00 2 Accumulated Cost At The End (24,00000+600,000) 2,400,000.00 3,000,000.00 3 Estimated costs to complete as of year-end 600,000.00 - 4 Estimated Total Cost (2+3) 3,000,000.00 3,000,000.00 5 Completion %(2/5) 80% 100% 6 Recognized Revenue till date 6000000*Completion% 4,800,000.00 6,000,000.00 7 Recognized Revenue in year 4,800,000.00 1,200,000.00 8 Billings during the year 3,150,000.00 2,450,000.00 9 Cash collections during the year 2,550,000.00 3,050,000.00 10 Gross Profit(7-1) 2,400,000.00 600,000.00Related Questions
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