Question
how do they get gross profit to be 827400? On March 1, 2017, Pharoah Construction Company contracted to construct a factory building for Fabrik Manufacturing
how do they get gross profit to be 827400?
On March 1, 2017, Pharoah Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,330,000. The building was completed by October 31, 2019. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2017, 2018, and 2019 are given below.
| 2017 | 2018 | 2019 | ||||
| Contract costs incurred during the year | $2,671,200 | $2,193,000 | $2,395,800 | |||
| Estimated costs to complete the contract at 12/31 | 3,688,800 | 2,395,800 | 0 | |||
| Billings to Fabrik during the year | 3,170,000 | 3,510,000 | 1,650,000 |
(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.)
2017
2018
2019
(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.)
Expert Answer
Sonali answered this
Was this answer helpful?
0
0
889 answers
(a) Percentage of Completion Method
Step 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
Intermediate accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
7th edition
978-0077614041, 9780077446475, 77614046, 007744647X, 77647092, 978-0077647094
