Incurred sellin Incidental income from the sale of certain m materials were sold since it was considered surplus from the early P the construction. The engineers determined that the original estimate of costs did not inclu any expected warranty costs of P200,000. 23. Determine the profit for the first year. P840,000 P600,000 P220,000 a. C. D715 000 d.
Incurred sellin Incidental income from the sale of certain m materials were sold since it was considered surplus from the early P the construction. The engineers determined that the original estimate of costs did not inclu any expected warranty costs of P200,000. 23. Determine the profit for the first year. P840,000 P600,000 P220,000 a. C. D715 000 d.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please answer No. 22 and 23
The First Part of Question No. 23 is on the other Picture
Provide a complete solution. Thank You
Transcribed Image Text:(1 92,000)
2.JM
'n
SMDC Company has started construction work on a project with a fixed contract
price of P4,000,000. SMDC expects to incur total costs of P3,000,000 on this project.
During the first year of the project, the following transactions occurred:
Transcribed Image Text:Chapter 8- Long Term Construction Contracts
Incurred cost of materials, labor and overhead used in the work, P2,400,000.
Paid costs of materials purchased but set aside for use in a future date for
this project, P200,000. These materials do not have any alternative use and
cannot be sold to other parties.
Paid and incurred rectification work no expected to be recovered, P260,000.
Incurred general and administrative costs that are not reimbursable,
P100,000.
Incurred selling costs, P60,000.
Incidental income from the sale of certain materiałs, P40,000. These specific
materials were sold since it was considered surplus from the early phase of
the construction.
The engineers determined that the original estimate of costs did not include
any expected warranty costs of P200,000.
23. Determine the profit for the first year.
P600,000
P220,000
a.
P840,000
C.
b.
P715,000
d.
On August 1, 2019, Panglao Construction Company obtain a contract to construct
a low rise building in Taguig City. The building was estimated to cost P17.5M and
is scheduled for completion on October 2021. The contract contains a penalty
clause to the effect that the other party is to deduct P35,000 from the contract price
for each week of delay. Completion was delayed for 5 weeks. Below are the data
pertaining to the construction period.
2019
2020
2021
Costs incurred
Estimated cots to complete
Progress Billings
P1,750,000
7,000,000
1,400,000
P1,085,000
P6,440,000
910,000
15,225,000
4,200,000
24. Using the percentage of completion method, the realized gross profit (loss( for
the 2021 is:
year
P822,500
b. (P35,000)
a.
P840,000
C.
d.
(P122,500)
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