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Jorg is building an office building for Wilmington Company for $20,000,000. The contract has the following characteristics: The office building is built to the customers
Jorg is building an office building for Wilmington Company for $20,000,000. The contract has the following characteristics:
| The office building is built to the customers specifications and the customer can make changes to these specifications over the contract term. | |
| Progress payments are made by the customer throughout construction. | |
| The customer can cancel the contract at any time (with a termination penalty); any work in process is the property of the customer. |
Jorg provides you with the following details:
| December 31 | |||
|---|---|---|---|
| 2017 | 2018 | 2019 | |
| Costs incurred to date | $8,000,000 | $16,000,000 | $18,000,000 |
| Estimated costs to complete | 6,000,000 | 3,000,000 | |
| Billings to date | 8,000,000 | 16,000,000 | 20,000,000 |
| Collections to date | 6,000,000 | 12,000,000 | 18,000,000 |
Required:
| 1. | Calculate the estimated total gross profit on the contract as of December 31, 2017, 2018, and 2019. |
| 2. | Calculate the percentage of completion for 2017, 2018, and 2019. |
| 3. | Calculate the amount of income (loss) Jorg will recognize for 2017, 2018, and 2019. |
| 4. | Prepare all journal entries related to this project for Jorg for all 3 years. |
| 5. | How will this project be carried on the balance sheet for 2017, 2018, and 2019? |
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Financial And Managerial Accounting 15th Edition Text Only
Authors: Jan Williams
15th Edition
B005FCGT4O
