Question
1. KC Construction Company has a contract to construct a $4,500,000 bridge at an estimated cost of $4,000,000. The contract is to start in July
1. KC Construction Company has a contract to construct a $4,500,000 bridge at an estimated cost of $4,000,000. The contract is to start in July 2010, and the bridge is to be completed in October 2012. The following data pertain to the construction period.
a) Compute percentage of completion.
| 2010 | 2011 | 2012 |
Contract price | $4,500,000 |
|
|
Less estimated cost: |
|
|
|
Costs to date | 1,000,000 |
|
|
Estimated costs to complete | 3,000,000 |
|
|
Estimated total costs | 4,000,000 |
|
|
Estimated total gross profit | $ 500,000 |
|
|
Percent complete | 25% |
|
|
| $1,000,000/$4,000,000 |
|
|
b) Prepare journal entries to record (1) the costs of construction, (2) progress billings, and (3) collections for 2010, 2011, and 2012.
c) KC
KC Construction Company has a contract to construct a $4,500,000 bridge at an estimated cost of $4,000,000. The contract is to start in July 2010, and the bridge is to be completed in October 2012. The following data pertain to the construction period. Compute percentage of completion. Prepare journal entries to record (1) the costs of construction, (2) progress billings, and (3) collections for 2010, 2011, and 2012. KC's entries to recognize revenue and gross profit each year and to record completion and final approval of the contractStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started