Rookie Construction Limited (RCL) entered into a contract to construct a building for $975,000. Thecontract provided for progress payments. RCL's accounting year ends December 31 Work began underthe contract on August 1, 2020, and was completed on October 31, 2022. ROCL uses the percentage-ofcompletion method to account for this long-term contract. Construction activities are summarized below2020$180,000630,000153,000140,0002021$630 000190 000535,500229 0002022$825 000Construction costs incurred to dateEstimated remaining costs to completeProgress Billings to dateCash Collections during the year975 000960 000 960,000Required: (Percentage calculations should be taken to 2 decimal places fie. 12.34%] Round calculationsto the nearest whole dollar.)1. Prepare the journal entries that should be recorded for 2021. Assume that all of the 2020 journalentries have been properly recorded.2. What should be the balance of Accounts Receivable at December 31, 2021?3. If the estimated remaining costs to complete were $805,000, instead of $630,000, as of December31, 2020, answer the following questions:a How much revenue should be reported by RCL for 2020?b How much income (loss) before income taxes should be reported by RCL for 20207

In construction process, the revenues and expenses are calculated on the basis of work % completed…

Rookie Construction Limited (RCL) entered into a contract to construct a building for $975,000. The contract provided for progress payments. RCL's accounting year ends December 31 Work began under the contract on August 1, 2020, and was completed on October 31, 2022. RCL uses the percentage of completion method to account for this long-term contract. Construction activities are summarized below 2020 $180 ,000 630,000 153,000 140,000 2021 $630 000 190,000 535,500 229 000 2022 $825 000 Construction costs incurred to date Estimated remaining costs to complete Progress Billings to date Cash Collections during the year 975 000 960 000

Rookie Construction Limited (RCL) entered into a contract to construct a building for $975,000. The contract provided for progress payments. RCL's accounting year ends December 31 Work began under the contract on August 1, 2020, and was completed on October 31, 2022. RCL uses the percentage of completion method to account for this long-term contract. Construction activities are summarized below 2020 $180 ,000 630,000 153,000 140,000 2021 $630 000 190,000 535,500 229 000 2022 $825 000 Construction costs incurred to date Estimated remaining costs to complete Progress Billings to date Cash Collections during the year 975 000 960 000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

In 2021, the Kokosing Construction Company of Columbus, Ohio entered into a contract to construct a road for Franklin County for $20,000,000. The road was completed in 2023. Information pertaining to the contract is provided below: 2021 2022 2023 Costs incurred during the year Estimated costs to complete as of year end Billings during the year Cash Collections during the year $4,800,000 $7,200,000 $4,400,000 11,200,000 4,000,000 4,000,000 8,000,000 8,000,000 3,600,000 7,200,000 9,200,000 Kokosing recognizes revenue over time according to percentage of completion. Required: 1. Compute the amount of revenue and gross profit to be recognized in 2021, 2022, and 2023. 2. Prepare the necessary journal entries for 2021 and 2022. Use the following accounts for your journal entries - "Construction in Progress", "Cash, Materials etc.", "Accounts Receivable", "Billings on Construction in Progress", "Cash", "Cost of Construction", and "Revenue from Long-term contracts". 3. Prepare a partial…
The Leverenz Construction Company began work on a $15,000 contract on 1/1/20. Planned completion was in 2022. The Percentage-of-Completion method is used. Given the following: Costs incurred to date Estimated costs to complete Billings to date Collections to date 2021 Net Income (Loss) is: Select one: O a. $(650) O b. $(200) O c. $(539) O d. $(89) e. $200 2020 $3,300 9,900 3,000 2,900 2021 $6,800 8,400 5,800 5,500 2022 $15,700 0 13,000 12,000
Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,860,000. The project began in 2021 and was completed in 2022 Data relating to the contract are summarized below: 2021 $ 372,000 $1,899,00e 1,488,eee 524,000 318,eee 2022 Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 2,336,800 2,542, 000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time occording to percentege of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 ssuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented ot the end of 2021 assuming Nortel recognizes revenue over time according to percentege of completion. 4. Prepare a partial…
During 2019, Gulf Co. started a construction project with a total contract price of $3,500,000. Additional information is given below: 2019 2020 Actual costs incurred during the S1,350,000 S1,525,000 year Estimated remaining costs Billings to customers Collected from customers 1,350,000 1,200,000 2,300,000 1,000,000 2,400,000 What amount of gross profit should be recognized in 2020?
jay
Advise the directors whether or not X Limited should have entered into the contract. Justifyyour answer.
Y3
s
Explain clearly
In 2019, Tarlo Company agrees to construct a highway for Brice County over a 3-year period (2019 through 2021). The contract price is $1,200,000, and the construction costs (both actual and estimated) total $705,000 for the 3 years. Tarlo's estimate of progress toward satisfaction of the performance obligation at the end of each year is as follows: 2019, 20%; 2020, 75%; 2021, 100%. Required: 1. Prepare a schedule showing the amount of gross profit that Tarlo recognizes each year assuming the performance obligation is determined to be satisfied over time. Tarlo Company Gross Profit: Percentage-of Completion Method 2019 through 2021 Amount 2019 $ 2020 2021 Total gross profit $ 2. Prepare a schedule showing the amount of gross profit that Tarlo recognizes each year assuming the performance obligation is satisfied at a point in time. If an amount is zero, enter "0". Tarlo Company Gross Profit: Completed-Contract Method 2019 through 2021…
5
The Naples Company uses the percentage-of-completion method and the cost-to-cost method for its long-term construction contracts. On one such contract, Naples expects total revenues of P260,000. During the first year, Naples incurred costs pf P50,000 and billed the customer P30,000 under the contract. At what net amount should Naples Construction in Progress for this contract be reported at the end of the first year? a. P 35,000 b. 65,000