n March 1, 2017, Bramble Construction Company contracted to construct a factory
ID: 2592608 • Letter: N
Question
n March 1, 2017, Bramble Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,330,000. The building was completed by October 31, 2019. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2017, 2018, and 2019 are given below:
2017
2018
2019
(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any fields blank.)
2017
2018
2019
Contract costs incurred during the year $2,671,200 $2,193,000 $2,395,800 Estimated costs to complete the contract at 12/31 3,688,800 2,395,800 –0– Billings to Fabrik during the year 3,170,000 3,510,000 1,650,000 WileyPLUS coi secure https://edugen.iileyplus.co ::: AppsMySIU Rock marksSU Homepagesulaptop SupportQurSrnry Talley & r.uni 201517 undergrad E Th nauus on m Fin: D Digic ation e Portfol M Gmail Employ Connectin Other bookmarkes Financial Ath Fdition and Tntermediate Accounting 16th Fdition, NileyPL IS Custos Coure tor St ohn's Liniversity ENTEKMEDEATE ACC L and 11 (ACC 1371, 3372) to cangkete the 12.3 12:48 PM 12/10/2017Explanation / Answer
2017
2018
2019
Contract cost incurred during the year
2671200
2193000
2395800
Estimated costs to complete the contract
3688800
2395800
0
Percentage of completion
2671200/3688800 *100 = 72.41%
(2671200+2193000)/( 2671200+2193000+2395800) = 4864200/7260000 *100 = 67%
100%
Contract revenue to be recognized
8330000*72.41% = 6031753
8330000*67% = 5581100
8330000*100% = 8330000
Contract revenue recognized in earlier period
0
6031753
6031753 – 450653 = 5581100
Contract revenue for period
6031753
(450653)
8330000 – 5581100 = 2748900
2017
2018
2019
Contract cost incurred during the year
2671200
2193000
2395800
Estimated costs to complete the contract
3688800
2395800
0
Percentage of completion
2671200/3688800 *100 = 72.41%
(2671200+2193000)/( 2671200+2193000+2395800) = 4864200/7260000 *100 = 67%
100%
Contract revenue to be recognized
8330000*72.41% = 6031753
8330000*67% = 5581100
8330000*100% = 8330000
Contract revenue recognized in earlier period
0
6031753
6031753 – 450653 = 5581100
Contract revenue for period
6031753
(450653)
8330000 – 5581100 = 2748900
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