Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company that specializes in long-term construction contracts enters into a $6,000,000 contract that will take four years to complete. The following information is available:

image text in transcribed
A company that specializes in long-term construction contracts enters into a $6,000,000 contract that will take four years to complete. The following information is available: Year 1 Year 2 Year 3 Year 4 Cumulative contract costs $ 825,000 $2,280,000 $4,270,000 $6,150,000 Estimated costs to complete $4,675,000 $3,420,000 $1,830,000 $0 Annual Billings $1,000,000 $2,000,000 $1,500,000 $1,500,000 Upload a file to answer this question. Show and label your work in order to receive partial credit. Put losses in (brackets). Round to the nearest whole percent (e.g., 13%). Be sure your answers to the following questions are clearly labeled. Do not expect me to intuit your answers from the work shown. Assume the company recognizes revenue over time based on the percentage of completion. A. How much will be shown as Revenue from Long-Term Contract in the Year 1 financial statements? B. How much Gross Profit (Loss) will be recognized in Year 1 ?! C. How will this contract be shown on the balance sheet at the end of Year 1? Give financial statement classification, presentation, and amount. D. Prepare the journal entry to recognize revenue and gross profit for Year 2. E. How much Gross Profit (Loss) will be recognized in the Year 3 income statement? Now assume the company recognizes revenue upon completion of the contract F. How much gross profit (loss) will be shown in the income statement for Year 3 (if none, so state)? G. How much gross profit (loss) will be shown in the income statement for Year 4 (if none, so state)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A Textbook Of Accounting For Management

Authors: S.N. Maheshwari

3rd Edition

9325956195, 978-9325956193

More Books

Students also viewed these Accounting questions

Question

Define positive thinking and cite its benefits.

Answered: 1 week ago