PROBLEM 2 Lahar Construction Corporation contracted with the City of Pampanga to construct a dam at a price of P16,000,000. Lahar 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 engineer. Use the proportional method. The following schedule summarizes the activities of the contract for the years 2018 - 2020. ESTIMATED COST TO COMPLETE COLLECTION S ON BILLINGS COST ENGINEER'S BILLINGS ON CONTRACT YEAR INCURRED ESTIMATE COST OF _(ACTUAL COST) COMPLETION 2018 4,600,000 9,640,000 31% 5,000,000 4,500,000 2019 4,500,000 5,100,000 58% 6,000,000 5,400,000 2020 5,250,000 100% 5,000,000 6,100,000 iStock

PROBLEM 2 Lahar Construction Corporation contracted with the City of Pampanga to construct a dam at a price of P16,000,000. Lahar 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 engineer. Use the proportional method. The following schedule summarizes the activities of the contract for the years 2018 - 2020. ESTIMATED COST TO COMPLETE COLLECTION S ON BILLINGS COST ENGINEER'S BILLINGS ON CONTRACT YEAR INCURRED ESTIMATE COST OF _(ACTUAL COST) COMPLETION 2018 4,600,000 9,640,000 31% 5,000,000 4,500,000 2019 4,500,000 5,100,000 58% 6,000,000 5,400,000 2020 5,250,000 100% 5,000,000 6,100,000 iStock

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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Required: Calculate the following: a. estimated total cost of completion, b. estimated profit on completion, c. estimated profit to date. Lim Construction is building Univ tower Near Unicity, Sibu. The date of commencement of construction is 1 January 2021 and the date of completion is on 31 December 2026. During the year ending 31 December 2021, the following information reported: RM Contract price Plant sent to site Purchasing of materials Wages paid Direct expenses Overhead incurred 13,000,000.00 2,000,000.00 3,000,000.00 1,500,000.00 1,000,000.00 500,000.00 At the end of December 2021, the following available: 1. Material unused on site amounted RM1,000,000.00 2. Wages owing RM500,000.00 3. Value of work certified RM6,000,000.00 4. Cost of work done but not yet certified amounted to RM500,000.00 5. Plant at site RM1,500,000.00
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. Estimate Cost to Cost Year Incurred х0 P4,600,000 4,500,000 5,250,000 xl x2 Engineer's Estimate of Complete P9,640,000 5,100,000 -0- x0 a. P545,600; b. P545,600; Billings Completion 31% 71 58% 100% 60 *A 10% retainer accounts for the difference collections. between billings and br 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?id x1 x2 P 498,400; P 606,000 P1,044,000; c. P1,760,000; P6,400,000; d. P1,760,000; P1,800,000; Collection on Contract on Billings…
Assume that Ivanhoe Construction Company has a non-cancellable contract to construct a $4,600,000 bridge at an estimated cost of $4,140,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. Assume that progress billings are non-refundable. Costs to date (12/31) Estimated costs to complete (12/31) Progress billings during the year Cash collected during the year Contract price Estimated total cost Estimated gross profit Estimated loss 2023 $1,035,000 3,105,000 *$2,980,800+$1,676,700 955,000 788,000 2025 $2,980,800 $4,657,500 1,676,700 2024 The revised estimates for the bridge contract are as follows. 2,443,000 1,801,000 2023 Original Estimates 2024 Revised Estimates $4,600,000 $4,600,000 4,140,000 4,657.500* $460,000 1,202,000 2,011,000 0 $(57,500)
GinebraCorporation recognizes construction revenue and cost using the percentage of completion method. During 2021, a single long-term project was begun which continued through 2021. Information on the project follows: 2021. 2022 Partial billing on contract 1,000,000. 4,200,000 Accounts receivable 1,000,000 3,000,000 Construction cost 1,050,000 1,920,000 Construction in progress 1,220,000 3,640,000 What is the gross profit recognized from this long-term construction contract in year 2021 and 2022, respectively? 2021 2022 A.220,000. 2,280,000 B.170,000. 500,000 C.220,000. 1,000,000 D.170,000. 1,280,000
Assume that Sunland Construction Company has a non-cancellable contract to construct a $4,520,000 bridge at an estimated cost of $4,068,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. Assume that progress billings are non-refundable. 2023 2024 2025 Costs to date (12/31) $1,017,000 $2,928,960 $4,576,500 Estimated costs to complete (12/31) 3,051,000 1,647,540 0 Progress billings during the year 968,000 2,418,000 1,134,000 Cash collected during the year 817,000 1,897,000 1,806,000 The revised estimates for the bridge contract are as follows. 2023 Original Estimates 2024 Revised Estimates Contract price $4,520,000 $4,520,000 Estimated total cost 4,068,000 4,576,500* Estimated gross profit $452,000 Estimated loss $(56,500) *$2,928,960 + $1,647,540 (a1) Under the percentage-of-completion method, calculate…
Assume that Sunland Construction Company has a non-cancellable contract to construct a $4,520,000 bridge at an estimated cost of $4,068,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. Assume that progress billings are non-refundable. Costs to date (12/31) Estimated costs to complete (12/31) Progress billings during the year Cash collected during the year Contract price Estimated total cost Estimated gross profit Estimated loss. 2023 *$2,928,960+ $1,647,540 $1,017,000 3,051,000 968,000 817,000 The revised estimates for the bridge contract are as follows. 2024 $2,928,960 1,647,540 2,418,000 1,897,000 2025 $4,576,500 1,134,000 0 1,806,000 2023 Original Estimates 2024 Revised Estimates $4,520,000 $4,520,000 4,068,000 4,576,500* $452,000 $(56,500) Under the percentage-of-completion method, how would Sunland record the long-term contract revenues, expenses, and losses in 2024. Please show…
Paul Constructions has entered into a contract beginning January 1, 2020, to build a pool. It has been estimated that the pool will cost P300,000, and will take three years to construct. The pool will be billed to the purchasing at P450,000. The following data pertain to the construction period. 2020 135,000 165,000 2021 210,000 90,000 2022 0 Cost to date: Estimated cost to complete. Progress billing to date. Cash collected to date 135.000 120.000 275.000 250,000 450,000 450.000 During 2020, Costs incurred include P15,000 standard materials stored at the site to be used in 2022 to complete the project. Using the percentage of completion method, compute the recognize gross profit for 2022: a. 52,500 b. 45,000 c. 97.500 d. 150,000 2. The CIP net of Progress billing is a. 27.500 current liability b. 32,500 current asset c. 167,500 current asset. d. 102,500 current liability
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1.On March 1, 2022, AGGREGATES Company enters a contract to build a hotel which is estimated to cost P31,200,000. The company recognizes construction revenue over time. Data on this project for 2022-2024 follow:Contract BillingsCosts incurredEst’d Costs to Complete2022 10,500,000 5,460,000 20,540,0002023 12,500,000 9,984,000 13,156,0002024 14,440,000 15,756,000 -The contract contains a penalty clause that penalizes the company a reduction of P70,000 from the contract price for every week of delay. In 2024, the contract was delayed for 8 weeksWhat is the gross profit for 2024?A. 1,164,000 C. 1,724,000B. 1,466,400 D. 1,824,000 2.MOC Construction Company started work on three job sites during the current year. Any costs incurred are expected to be recoverable. Data relating to the three jobs are given below:Site Contract PriceCost IncurredEstimated Costs to CompleteBillings on ContractCollections on Billings1 5,000,000 3,750,000 - 5,000,000 5,000,0002 7,000,000 1,000,000 4,000,000 900,000…
SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: December 31, 2021 December 31, 2022 Percentage of completion 30% 82.5% Estimated cost to complete 1,960,000 840,000 1. What is the total cost incurred in year 2022? С. 1,680,000 D. 3,120,000 A. 4,073,750 В. 840,000 2. The realized gross profit (loss) in year 2022 is A. 650,000 B. 405,000 C. (. 245,000) D. (1,055,000) 3. What is the construction cost of sales for year 2022? С. 3,233,750 D. 4,478,750 A. 3,960,000 В. 3,120,000 4. What is the construction-in-progress as of 2022? А. 3,423,750 C. 2,065,000 В. 3,310,000 D. 2,470,000
On February 1, 2023, Magicfort Contractors agreed to construct a building at a contract price of $5,840,000. Magicfort estimated total construction costs would be $4,032,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: 2023 2024 2025 Total costs incurred to date Estimated costs to complete $1,512,000 2,520,000 $2,664,000 $4,620,000 1,776,000 -0- Customer billings to date 2,240,000 4,032,000 5,640,000 Collections to date 2,040,000 3,540,000 5,540,000 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. Percentage-of-Completion Gross Profit 2023 2023 Cost-Recovery Gross Profit 2024 $ 2025 $ SA 2024 2025 $
Hardhat Construction Company has a contract to construct a €4,500,000 bridge at an estimated cost of €4,556,250. The contract is to start in July 2019, and the bridge is to be completed in October 2021. The following data pertain to the construction period. 2019 2020 2021 Cost to date $ 1,000,000 $ 2,916,000 $ 4,556,250 Estimated cost to complete 3,000,000 $ 1,640,250 Progress billing during the year 900,000 2,400,000 1,200,000 Cash collected during the year 750,000 1,750,000 2,000,000 REQUIRED: a) Using percentage-of-completion method, prepare schedules to compute the profit and loss to be recognized as a result of this contract for the year ended October 31, 2019, 2020 and 2021. b) Using cost recovery method, prepare schedules to compute the profit and loss to be recognized as a result of this contract for the year ended October 31, 2019, 2020 and 2021.