Saved In 2018, Long Construction Corporation began construction work under a thr

Question

Saved In 2018, Long Construction Corporation began construction work under a three-year contract. The contract price is $3.300,000. Long presentation relating to this contract at December 31, 2018, is as follows $47,000 Accousts receivable (fron construction progress billings) Construction in progress Less: Billings on construction contract Cost and profit of uncompleted contracts in excess of billings 330,000 (319,909) 13,000 Income (befors tax) on the contract recogpized in 2018 $37,009 Required: 1. What was the cost of construction actually incurred in 2018? 2. How much cash was collected in 2018 on this contract? 3. What was the estimated cost to complete as of the end of 2018? 4. What was the estimated percentage of completion used to calculate revenue in 2018 Actual costs incurred in 2018 colections in 2018 3 Estimated cost to complete 4 Estimated percentage

Explanation / Answer

1 Construction in progress = Costs incurred + Profit recognized Cost inccurred = construction in progress - profit recognized 330000-37000 293000 2 How much cash was collected in 2018 on this contract? Billings = Cash collections + Accounts Receivable Cash collections = billing - accounts receivable 319000-47000 272000 3 What was the estimated cost to complete as of the end of 2018 Let A = Actual cost incurred + Estimated cost to complete Actual cost incurred/A x (Contract price - A) = Profit recognized 293000/A*(3300000-A) =37000 966900000000-293000A=37000A A = 2930000 Estimated cost to complete = 2930000-293000 2637000 4 Estimated percentage of completion used to calculate income 293000/2930000 10%

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