Long-Term construction Contracts

Forman Company has contracted to build a damm over a period of 4 years for $3,000,000. Information re;ating to the the performance of the contract is summarized as follows:

2013 2014 2015 2016

Construction costs incurred during the year $300,000 $1,100,000 $863,00 $837,000

Estimated cost to complete $2,200,000 1,400,000 837,00 ______

Billings during the year 280,000 870,000 1,030,000 820,000

Collection during the year 270,000 875,000 1,010,000 845,000

If an amount is zreo, enter 0

1.a Compute the profit or loss for each year of the contract under the percentage of completion method. Enter losses as a negative number

Forman Company

Profit/Loss

2013-2016

2013 2014 2015 2016

Gross Profit _______ ________ ______ _______

b. Compute the profit or losss for each year of the contract under the completed-contract method. Enter losses as a negative number.

Forman Company

Profit/Loss

2013-2016

2013 2014 2015 2016

Gross Profit _______________ _______ _______ _______

2 a. Prepare the relevant sections of the income statement for each year under the percentage of completion method

Forman Company

Income Statement (partial)

For the years ended 2013-2016

2013 2014 2015 2016

Construction Revenue ______________ ______________ ________ _________

Construction Expense _______________ _____________ _________ ___________

Gross profit (loss) ________________ ___________ ________ ___________

Forman Company

Balance Sheet (partial)

December 31, 2013

Current Assets

Accounts Receivable ___________________________

Inventory __________________________

Construction In Progress __________________________

Less Partial billings ___________________________

Costs and recognized profit not yet billed __________________________

Forman Company

Balance Sheet (partial)

December 31, 2014

Current Assets

Accounts Receivable ________________________

Inventory ________________________

Construction In Progress_________________________

Less: Partial billings

Costs and recognized profits not yet billed___________________

Forman Company

Balance sheet (partial)

December 31, 2015

Current Assets

Accounts receivable ____________________________

Inventory _____________________

Construction In Progress___________________

Less: Partial billing________________

Costs not yet billed_________________

Current laibilities

Provision for loss on contract_________________

b. Prepare the relevant sections of the income statement for each year under the completed contract method. Enter losses as anegative number

Forman Company

Income statement (partial)

For the years ended 2013-2016

Gross Profit 2013 2014 2015 2016

Prepare the relevant sections of the ending balance sheet for 2013 under the completed-contract method

Forman Company

Income Statement (partial)

December 31, 2013

Current Assets

Acounts Receivable ____________________

Inventory

Construction in progress

Less: Partial biliings

Excess of costs over related billings

Prepare the relevant sections of the ending balance sheet for 2014 under the completed-contract method

Forman Company

Ending Balance sheet (partial)

December 31, 2014

Current Assets

Accounts Receivable ______________________

Inventory_____________________

Construction in progress_____________________

Less: (partial)________________

Excess od costs over related billings_____________________

Forman Company

Ending Balance Sheet (partial)

December 31, 2015

Current Assets

Accounts Receivable___________________________

Current Liabilities

Partial billings_______________________

Less: Construction in Progress_________________

Provision for loss on contract___________________

Excess billings and provision for loss over________________________