2. On February 1, 2023, Marsh Contractors agreed to construct a building at a contract price of$17,400,000. Marsh estimated total construction costs would be $12,000,000 and the projectwould be finished in 2025. Information relating to the costs and billings for this contract is asfollows:Total costs incurred to dateEstimated costs to completeCustomer billings to dateCollections to date2023202420252023$4,500,0007,500,0006,600,0006,000,000InstructionsFill in the correct amounts on the following schedule. For percentage-of-completion accountingand cost-recovery accounting, show the gross profit that should be reported for 2023, 2024, and2025.Percentage-of-CompletionGross Profit202320242024$7,920,00020255,280,00012,000,00010,500,0002025$13,800,000-0-16,800,00016,500,000Cost-RecoveryGross Profit

It must be understand that revenue on contracts must be recognized on proportionate basis under…

2. On February 1, 2023, Marsh Contractors agreed to construct a building at a contract price of $17,400,000. Marsh estimated total construction costs would be $12,000,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 2024 Instructions Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and cost-recovery accounting, show the gross profit that should be reported for 2023, 2024, and 2025. 2025 2023 $4,500,000 7,500,000 6,600,000 6,000,000 Percentage-of-Completion Gross Profit 2023 2024 2024 $7,920,000 5,280,000 12,000,000 10,500,000 2025 2025 $13,800,000 -0- 16,800,000 16,500,000 Cost-Recovery Gross Profit

2. On February 1, 2023, Marsh Contractors agreed to construct a building at a contract price of $17,400,000. Marsh estimated total construction costs would be $12,000,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 2024 Instructions Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and cost-recovery accounting, show the gross profit that should be reported for 2023, 2024, and 2025. 2025 2023 $4,500,000 7,500,000 6,600,000 6,000,000 Percentage-of-Completion Gross Profit 2023 2024 2024 $7,920,000 5,280,000 12,000,000 10,500,000 2025 2025 $13,800,000 -0- 16,800,000 16,500,000 Cost-Recovery Gross Profit

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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On February 1, 2023, Sandhill Contractors agreed to construct a building at a contract price of $3,460,000. The total estimated construction costs would be $1,890,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 Gross profit/ (loss) 689,850 1,200,150 1,100,000 1,000,000 2023 2024 573050 $1,162,000 $ 2,365,000 913,000 1,890,000 1,750,000 2025 Calculate the gross profit / (loss) that should be recognized for 2023, 2024, and 2025 using the percentage completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percentage complete to 1 decimal place, e.g. 15.2% and final answers to O decimal places, e.g. 5,125.) 2024 -0- 3,460,000 2,950,000 -107450 $ LA 2025 40450
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