1. 30 pts In 2016, th construct a road for Orange County for $10,000,000. The ro

Question

1. 30 pts In 2016, th construct a road for Orange County for $10,000,000. The road was completed in 2018. Information related to the contract is as follows: e Roth Construction Company entered into a contract to 2017 2018 2016 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year $2,400,000 $3,600,000 $2,200,000 5,600,000 2,000,000 2,000,000 4,000,000 4,000,000 1,800,000 3,600,000 4,600,000 Roth recognizes revenue over time according to percentage of completion. Required 1. Calculate the amount of revenue and gross profit to be recognized in 2. Prepare all necessary journal entries for each of the years (credit 3. Prepare a partial balance sheet for 2016 and 2017 showing any items each of the three years. "various accounts" for construction costs incurred). related to the contract. Indicate whether any of the amounts shown are contract assets or contract liabilities. 4. Calculate the amount of revenue and gross profit to be recognized in each of the three years assuming the following costs incurred and costs to complete information 2016 2017 $2,400,000 $3,800,000 $3,200,000 5,600,000 3,100,000 2018 Costs incurred during the year Estimated costs to complete as of year-end

Explanation / Answer

Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital equals to current assets.

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