Citation Builders, Inc., builds office buildings and single-family homes. The office buildings are constructed under contract with reputable buyers. The homes are constructed in developments ranging from 10-20 homes and are typically sold during construction . or soon after. To secure the home upon completion, buyers must pay a deposit of 10% of the price of the home with the remaining balance due upon completion of the house and transfer of title. Failure to pay the full amount results in forfeiture of the down payment. Occasionally, homes remain unsold for as long as three months after construction. In these situations, sales price reductions are used to promote the sale During 2018, Citation began construction of an office building for Altamont Corporation. The total contract price is $16 million. Costs incurred, estimated costs to complete at year-end, billings, and cash collections for the life of the contract are as follows 2018 2019 2020 $3,200,000 7,600,000 3,600,000 Costs incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 9,600,000 1,600,000 1,440,000 3,600,000 8,000,000 6,560,000 6,400,000 8,000,000 Also during 2018, Citation began a development consisting of 12 identical homes. Citation estimated that each home will sell for $740,000, but individual sales prices are negotiated with buyers. Deposits were received for eight of the homes, three of which were completed during 2018 and paid for in full for $740,000 each by the buyers. The completed homes cost $555,000 each to construct. The construction costs incurred during 2018 for the nine uncompleted homes totaled $3,330,000 Required: 1. Which method is most equivalent to recognizing revenue at the point of delivery? 2. Answer the following questions assuming that Citation uses the completed contract method for its office building contracts 2-a. How much revenue related to this contract will Citation report in its 2018 and 2019 income statements? 2-b. What is the amount of gross profit or loss to be recognized for the Altamont contract during 2018 and 2019? 2-c. What will Citation report in its December 31, 2018, balance sheet related to this contract? (Ignore cash.) 3. Answer the following questions assuming that Citation uses the percentage-of-completion method for its office building contracts. 3-a. How much revenue related to this contract will Citation report in its 2018 and 2019 income statements? 3-b. What is the amount of gross profit or loss to be recognized for the Altamont contract during 2018 and 2019? 3-c. What will Citation report in its December 31, 2018, balance sheet related to this contract? (lgnore cash.) 4. Assume the same information for 2018 and 2019, but that as of year-end 2019 the estimated cost to complete the office building is $7,200,000. Citation uses the percentage-of-completion method for its office building contracts 4-a. How much revenue related to this contract will Citation report in the 2019 income statement? 4-b. What is the amount of gross profit or loss to be recognized for the Altamont contract during 2019? 4-c. What will Citation report in its 2019 balance sheet related to this contract? (Ignore cash.) 5. Which method of accounting should Citation Builders, Inc adopt for its single-family houses? 6. What will Citation report in its 2018 income statement and 2018 balance sheet related to the single-family home business (ignore cash in the balance sheet)? Req 1 2A and Req 2C Req 3A andReq 3C 4A and 4B Req 4C Req 5 Req 6A Req 6B 2B 3B Which method is most equivalent to recognizing revenue at the point of delivery? Answer the following questions assuming that Citation uses the completed contract method for its office building contracts: How much revenue related to this contract will Citation report in its 2018 and 2019 income statements? What is the amount of gross profit or loss to be recognized for the Altamont contract during 2018 and 2019? (Leave no cells blank - be certain to enter "O" wherever required. Loss amount should be indicated with a minus sign.) Show less 1. Recognizing revenue at the point of delivery? 2018 2019 2a. Revenue recognized 2b. Gross profit or loss to be recognized Req 1 2A and 2B Req 2C> Req 1 2A and Req 2C Req 3A and 3B Req 4A and 4B Req 3C Req 5 Req 6A Req 6B 2B What will Citation report in its December 31, 2018, balance sheet related to this contract? (Ignore cash.) Balance Sheet (Partial) At December 31, 2018 Current assets Current liabilities: Req 1 2A and 2B Req 3A and 3B> Req 1 2A andReq 2e 3A andReq 3C Re 4A n Req 4A and 4B Req 3C Req 4C Req 5Req 6A Req 6B 2B 3B Answer the following questions assuming that Citation uses the percentage-of-completion method for its office building contracts. How much revenue related to this contract will Citation report in its 2018 and 2019 income statements? What is th amount of gross profit or loss to be recognized for the Altamont contract during 2018 and 2019? (Loss amounts should be indicated with a minus sign.) Show less 2018 2019 Revenue reported Gross profit or loss to be recognized K Req 20 Req 3C Req 1 2A and 2B Req 4A and 4B Req 2C Req 4C Req 5 Req 6A Req 6B 3B What will Citation report in its December 31, 2018, balance sheet related to this contract? (Ignore cash.) Balance Sheet (Partial) At December 31, 2018 Current assets Current liabilities: K Req 3A and 3B Req 4A and 4B > Req 1 2A and 2B Req 3A andReq 3C Req 2C 2 Req 3C Req 4A and Req 4C Req 5 Req 6A Req 6B 3B 4B Assume the same information for 2018 and 2019, but that as of year-end 2019 the estimated cost to complete the office building is $7,200,000. Citation uses the percentage-of-completion method for its office building contracts. How much revenu related to this contract will Citation report in the 2019 income statement? What is the amount of gross profit or loss to be recognized for the Altamont contract during 2019? (Loss amounts should be indicated with a minus sign.) Show lessA 2019 Revenue reported Gross profit or loss to be recognized K Req 30 Req 4C Req 3A andReq 3C Req 4A and 4B Req 6A Req 6B 1 2A and 2B Reg Req 4CReq 5 2C 3B What will Citation report in its 2019 balance sheet related to this contract? (Ignore cash.) Balance Sheet (Partial) At December 31, 2019 Current assets Current liabilities: Req 5 > Req 4A and 4B Complete this question by entering your answers in the tabs below. Req 1 2A and Req 2 Req 3A and 38 Req 4A and 4B Req 3C Req 4CReq 5Req 6A Req 6B 2B Which method of accounting should Citation Builders, Inc adopt for its single-family houses? Citation Builders, Inc adopt for its single-family houses? KReq 4C Req 6A> Req 1 2A and Req 3A and 3B Req 4A and 4B Req 2C Req 3C 2B What will Citation report in its 2018 income statement related to the single-family home business (ignore cash in the balar sheet)? Income Statement (Partial) 2018 Req 1 2A andReq 2C Req 3A and 3B Req 4A and 4B Req 3C Req 4C Req 5 Req 6A Req 6B 2B What will Citation report in its 2018 balance sheet related to the single-family home business (ignore cash in the balance sheet)? Balance Sheet (Partial) At December 31, 2018 Current assets: Current liabilities: K Req 6A Req 6B