Egay Construction Corporation contracted with the province ofPampanga to construct a bridge at a contract price of P16,000,000. EgayCorporation expects to earn P1,520,000 on the contract. The percentageof completion method is to be used and the completion stage is to bedetermined by estimates made by the engineer. The following schedule'summarizes the activities of the contract for years x0-x2.EstimateCost toCostYear Incurredх0P4,600,0004,500,0005,250,000xlx2Engineer'sEstimate ofCompleteP9,640,0005,100,000-0-x0a. P545,600;b. P545,600;BillingsCompletion31% 7158%100%60*A 10% retainer accounts for the differencecollections.between billings andbrUnder the percentage of completion method, using the engineer's estimateas the measure of completion to be applied to revenues and costs, howmuch is the gross profit earned each year?idx1x2P 498,400; P 606,000P1,044,000;c. P1,760,000;P6,400,000;d. P1,760,000; P1,800,000;Collectionon Contract on BillingsP5,000,000 P4,500,000*6,000,000 5,400,000*5,000,000. 6,100,000P1,044,000P1,650,000P1,650,000

Construction contracts: Fixed Price Contracts and Cost Plus Contracts are two types of construction…

Egay Construction Corporation contracted with the province of Pampanga to construct a bridge at a contract price of P16,000,000. Egay Corporation expects to earn P1,520,000 on the contract. The percentage of completion method is to be used and the completion stage is to be determined by estimates made by the engineer. The following schedule summarizes the activities of the contract for years x0-x2. Cost Year xo x1 x2. Estimate Cost to Incurred Complete P4,600,000 P9,640,000 4,500,000 5,100,000 5,250,000 0 Engineer's Estimate of Billings xo a. P545,600; p b. P545,600; c. P1,760,000; d. P1,760,000; Completion 31% 58% 100%) A 10% retainer accounts for the difference between billings and collections. Under the percentage of completion method, using the engineer's estimate as the measure of completion to be applied to revenues and costs, how much is the gross profit earned each year? P1,044,000; P6,400,000; P1,800,000; x1 x2 P 498,400; P 606,000 Collection on Contract on Billings P5,000,000 P4,500,000 6,000,000 5,400,000* 5,000,000 6,100,000 P1,044,000 P1,650,000 P1,650,000

Egay Construction Corporation contracted with the province of Pampanga to construct a bridge at a contract price of P16,000,000. Egay Corporation expects to earn P1,520,000 on the contract. The percentage of completion method is to be used and the completion stage is to be determined by estimates made by the engineer. The following schedule summarizes the activities of the contract for years x0-x2. Cost Year xo x1 x2. Estimate Cost to Incurred Complete P4,600,000 P9,640,000 4,500,000 5,100,000 5,250,000 0 Engineer's Estimate of Billings xo a. P545,600; p b. P545,600; c. P1,760,000; d. P1,760,000; Completion 31% 58% 100%) A 10% retainer accounts for the difference between billings and collections. Under the percentage of completion method, using the engineer's estimate as the measure of completion to be applied to revenues and costs, how much is the gross profit earned each year? P1,044,000; P6,400,000; P1,800,000; x1 x2 P 498,400; P 606,000 Collection on Contract on Billings P5,000,000 P4,500,000 6,000,000 5,400,000* 5,000,000 6,100,000 P1,044,000 P1,650,000 P1,650,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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