In late 2010, Roost Inc. was awarded the contract to build a classroom building for a university The construction work began on 1/2/11. The original estimates developed by Roost for the job included Estimated completion date: Estimated contract price Estimated total costs: Estimated gross profit: 12/31/13 $81,000,000 (fixed) $74,000,000 $7,000,000 (8.64% of revenue) The total project includes various goods & services (example - concrete, structural steel, pipe, electrical wire, and the related installation services), but Roost is responsible for combining those goods & services for purposes of delivering a complete classroom building to the university Thus, the project represents a single performance obligation - i.e. the goods & services are capable of being distinct but are not separately identifiable. Furthermore, the revenue for the single performance obligation should be recognized over time since the university owns/ controls the work in process (i.e. it owns the underlying land), Roost has the right to be paid for the work in process, and Roost doesn't have an alternate use for the work in process. See p. 261 The following table summarizes cost, billings and cash collections related to the first two years of the project as well as estimated costs to complete Cost to date Estimated cost to comp Billed to date Collected to date As of December 31, 2011 26,452,000 48,048,000 27,000,000 25,800,000 2012 55,065,000 24,835,000 56,000,000 55,100,000 lete Required 1. Prepare all journal entries needed for 2011 and 2012 to recognize costs incurred, billings, collections and revenues earned per GAAP a. Use my suggested sequence of journal entries as illustrated on Blackboard. Summarize relevant amounts to be presented on the 12/31/11 and 12/31/12 balance sheets (i.e. accounts receivable, billings in excess of revenues earned and/ or revenues earned in excess of billings) and the 2011 and 2012 income statements (i.e. construction revenue, construction expense and gross profit) What is the amount of gross profit reported for 2012? Profit or loss? Why? 2. 3