Inexperienced construction company Martinez Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2,300,000. The work began in early 2020 and Martinez incurred costs of $1,035,000. At December 31, 2020, the estimated future costs to complete the project totalled $1,035,000. During 2021, Martinez ran into trouble with weather conditions and incurred the expected costs of $1,035,000 and estimated that it would need to spend an additional $355,000 to complete the project. During 2022, Martinez reluctantly completed the project, incurring further costs of $380,000. Calculate the amount of gross profit or loss that should be recognized each year under the percentage-of-completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percent complete to 2 decimal places, e.g. 15.25.) Gross profit/(loss) $ December 31, 2020 Date December 31, 2021 December 31, 2021 Account Titles and Explanation $ Prepare the December 31, 2021 year-end journal entry to record costs, revenues, expenses, and losses from the contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round percent complete to 2 decimal places, e.g. 15.25.) December 31, 2022 $ Debit Credit
Inexperienced construction company Martinez Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2,300,000. The work began in early 2020 and Martinez incurred costs of $1,035,000. At December 31, 2020, the estimated future costs to complete the project totalled $1,035,000. During 2021, Martinez ran into trouble with weather conditions and incurred the expected costs of $1,035,000 and estimated that it would need to spend an additional $355,000 to complete the project. During 2022, Martinez reluctantly completed the project, incurring further costs of $380,000. Calculate the amount of gross profit or loss that should be recognized each year under the percentage-of-completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percent complete to 2 decimal places, e.g. 15.25.) Gross profit/(loss) $ December 31, 2020 Date December 31, 2021 December 31, 2021 Account Titles and Explanation $ Prepare the December 31, 2021 year-end journal entry to record costs, revenues, expenses, and losses from the contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round percent complete to 2 decimal places, e.g. 15.25.) December 31, 2022 $ Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Inexperienced construction company Martinez Corp. signed a risky non-cancellable contract to build a research facility at a fixed
contract amount of $2,300,000. The work began in early 2020 and Martinez incurred costs of $1,035,000. At December 31, 2020, the
estimated future costs to complete the project totalled $1,035,000. During 2021, Martinez ran into trouble with weather conditions
and incurred the expected costs of $1,035,000 and estimated that it would need to spend an additional $355,000 to complete the
project. During 2022, Martinez reluctantly completed the project, incurring further costs of $380,000.
Calculate the amount of gross profit or loss that should be recognized each year under the percentage-of-completion method. (Enter
negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percent
complete to 2 decimal places, e.g. 15.25.)
Gross profit/(loss)
Date
December 31, 2020
December 31,
2021
$
December 31, 2021
Prepare the December 31, 2021 year-end journal entry to record costs, revenues, expenses, and losses from the contract. (Credit
account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select
"No Entry" for the account titles and enter 0 for the amounts. Round percent complete to 2 decimal places, e.g. 15.25.)
Account Titles and Explanation
$
December 31, 2022
Debit
100
Credit
100
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