2017 2018 2019 Marin Construction Company has entered into a contract beginning
ID: 2563023 • Letter: 2
Question
2017
2018
2019
Marin Construction Company has entered into a contract beginning January 1, 2017, to build a parking complex. It has been estimated that the complex will cost $601,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $903,000. The following data pertain to the construction period.2017
2018
2019
Costs to date $270,450 $492,820 $613,000 Estimated costs to complete 330,550 108,180 –0– Progress billings to date 273,000 550,000 903,000 Cash collected to date 243,000 500,000 903,000(a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter 0. Do not leave any fields blank.)
Gross profit recognized in 2017 $ Gross profit recognized in 2018 $ Gross profit recognized in 2019 $
(b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter 0. Do not leave any fields blank.)
Gross profit recognized in 2017 $ Gross profit recognized in 2018 $ Gross profit recognized in 2019 $
Explanation / Answer
2017 Cost incurred 270,450 Total estimated cost (270450+330550) 601,000 Contract price 903,000 Total Gross profit 302,000 % Percentage completion (270450/601000 *100) 45.00% Gross Profit receognized in Year 2017 (302000*45%) 135,900 Contract Expense during 2017 270,450 Conttract revenue 406,350 2018 Cost incurred 222,370 Total estimated cost (492820+108180) 601,000 Contract price 903,000 Gross Profit 302,000 % Percentage completion (492820/601000*100) 82.00% Gros Profit to be recognized in 2018(302000*82%-135900) 111,740 Contract Expense during 2017 222,370 Conttract revenue 334,110 2019 Cost incurred 120,180 Total estimated cost 613,000 Contract price 903,000 Total gross Profit 290,000 % Percentage completion 100.00% Gross Profit to be recognized in 2019(290000-111740-135900) 42,360 Contract Expense during 2019 120,180 Conttract revenue 162,540 ReqA: Gross profit recognized in 2017 135900 Gross profit recognized in 2018 111740 Gross profit recognized in 2019 42360 ReqB: Under completed contract , profit is recognized only in the year when contract is completed Gross profit recognized in 2017 Nil Gross profit recognized in 2018 Nil Gross profit recognized in 2019 290000 (903,000-613000)
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