IV. (30 points) Income recognition.

On March 16, 2017, a local construction company accepted a contract to construct a community activity center for Washington County. The contract price was fixed at $320,000. The company expected to complete the project in three years. Information regarding the performance of the contract is summarized below for years 2017 and 2018. And the company used the percentage-of- completion cost-to-cost method.

Actual construction costs incurred in the year Estimated additional costs to complete Estimated total costs Progress billings in the year

Cash collections in the year

2017 $50,000 $150,000 $200,000 $55,000 $50,000

2018 $138,000 $47,000 $235,000 $150,000 $152,000

Required 1: (15 points) Compute the items listed below for this local construction company, using the percentage-of-completion cost-to-cost method. Round your calculations to two decimal places, if needed.

2017 2018

(a) Cumulative percent completed by 12/31

(b) Gross profit (or loss) recognized in the year

(c) Balance in construction in progress on 12/31

(d) Balance in progress billings on 12/31

(e) Balance in A/R from progress billings on 12/31

Construction revenue Construction expenses Gross profit

Partial Income Statements 2017 2018

$ $ . $ $ . $ $ .

Partial balance sheet on 12/31/2017

Assets: A/R from progress billings Construction in progress Less: Progress billings Construction in progress not yet billed

$ . $ . $ . $ .