P18-10 (Recognition of Profit and Entries on Long-Term Contract) On March 1, 2014, Shanahan Construction Company entered
into a contract to build a parking complex It is estimated that the building will cost	$600,000	and will take 3 years
to complete. The contract price was	$900,000	The following information pertains to the construction period.
2014	2015	2016
Costs to date:	$270,000	$450,000	$610,000
Estimated costs to complete:	330,000	150,000	0
Progress billing to date:	270,000	550,000	900,000
Cash collected to date:	240,000	500,000	900,000
Instructions:
(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.
Gross profit recognized in:
2014	2015	2016
Contract price		$900,000		$900,000		$900,000
Costs:
Costs to date	$270,000		$450,000		$610,000
Estimated costs to complete	330,000	600,000	150,000	600,000		610,000
Total estimated profit		300,000		300,000		290,000
Percentage completed to date		45%		75%		100%
Total gross profit recognized		135,000		225,000		290,000
Less: GP recognized in previous years		0		135,000		225,000
Gross profit recognized in current year		$135,000		$90,000		$65,000
(b) Prepare all necessary journal entries for 2016.
	Construction in Process	150,000
Materials, Cash, Payables, ect.		150,000
	Accounts Receivable	900,000
Billing on Construction		900,000
	Cash	900,000
Accounts Receivable		900,000
	Construction in Process	65,000
Construction Expenses	150,000
Revenue from Long-term contracts		215,000
	Billings on Construction in Process	610,000
Construction in Process		610,000
(c) Prepare a partial balance sheet for December 31, 2015, showing the balances in the receivables and inventory accounts.
CHANCE COMPANY
Balance Sheet (Partial)
December 31, 2015
Current assets:
Accounts Receivable		Amount
Inventories
Construction in process	Amount
Less: billings	Amount
Costs and recognized gross profit in excess of billings		Formula

Moises Ortiz Robles Date: Course: Instructor: Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield E18-7 (Sales Recorded Both Gross and Net) On June 3, Hunt Company sold to Ann Mount merchandise having a sales price of $8,000 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $120 , terms n/30, was received by Mount on June 8 from the Olympic Transport Service for the freight cost. Upon receipt of the goods, June 5, Mount notified Hunt Company that merchandise costing $300 contained flaws that rendered it worthless. The same day, Hunt Company issued a credit memo covering the worthless merchandise and asked that it be returned at company expense. The freight on the returned merchandise was $24 paid by Hunt Company on June 7. On June 12, the company received a check for the balance due from Mount. Instructions: (a)(1) Prepare journal entries on Hunt Company books to record all the events noted above under the sales and receivables are entered at gross selling price concept. Jun 3 Jun 5 Jun 7 Jun 12 Account Receivable Sales Sales Returns and Allowance Account Receivable Transportation Cash Cash Sales Discounts Accounts Receivable 8,000 8,000 600 600 24 24 7,252 148 7,400 (a)(2) Prepare journal entries on Hunt Company books to record all the events noted above under the sales and receivables are entered net of cash discounts concept. Jun 3 Jun 5 Jun 7 Jun 12 Accounts Receivable Sales Sales Returns and Allowances Account Receivable Transportation Cash Cash Accounts Receivable 7,840 7,840 588 588 24 24 7,252 (b) Prepare the journal entry under basis 2, assuming that Ann Mount did not remit payment until August 5. Cash 7,400 Aug 5 Account Receivable Sales Discounts Forfeited 7,252 7,252 148 qattachments_d7859b48f340bd9fcda5230d6c6c8aa4e12e94dc.xlsx, Exercise 18-7, Page 1 of 3, 06/04/2016, 15:18:28 Name: Date: Instructor: Course: Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield E18-28 (Gross Profit on Uncompleted Contract) On April 1, 2014, Dougherty Inc. entered into a costplus-fixed-fee contract to construct an electric generator for Altom Corporation. At the contract date, Dougherty estimated that it would take 2 years to complete the project at a cost of $2,000,000 The fixed fee stipulated in the contract is $450,000 Dougherty appropriately accounts for this contract under the percentage-of-completion method. During 2014, Dougherty incurred costs of $800,000 related to the project. The estimated cost at December 31, 2014, to complete the contract is $1,200,000 Altom was billed $600,000 under the contract. Instructions: Prepare a schedule to compute the amount of gross profit to be recognized by Dougherty under the contract for the year ended December 31, 2014. Show supporting computations in good form. DOUGHERTY INC. Computation of Gross Profit to Be Recognized on Uncompleted Contract For The Year Ended December 31, 2014 Total contract price Estimated contract cost at completion (800,000+1,200,000) Fixed fee Total $2,000,000 450,000 $2,450,000 Total estimated cost Gross profit Percentage of completion (800,000/2,000,000) Gross profit to be recognized (450000 X 40%) $2,000,000 450,000 40% $180,000 qattachments_d7859b48f340bd9fcda5230d6c6c8aa4e12e94dc.xlsx, Exercise 18-28, Page 2 of 3, 06/04/2016, 15:18:28 Name: Date: Instructor: Course: Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield P18-10 (Recognition of Profit and Entries on Long-Term Contract) On March 1, 2014, Shanahan Construction Company entered into a contract to build a parking complex It is estimated that the building will cost $600,000 and will take 3 years to complete. The contract price was $900,000 The following information pertains to the construction period. Costs to date: Estimated costs to complete: Progress billing to date: Cash collected to date: 2014 $270,000 330,000 270,000 240,000 2015 $450,000 150,000 550,000 500,000 2016 $610,000 0 900,000 900,000 Instructions: (a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used. Gross profit recognized in: 2014 Contract price Costs: Costs to date Estimated costs to complete Total estimated profit Percentage completed to date Total gross profit recognized Less: GP recognized in previous years Gross profit recognized in current year 2015 $900,000 $270,000 330,000 600,000 300,000 45% 135,000 0 $135,000 2016 $900,000 $450,000 150,000 $900,000 $610,000 600,000 300,000 75% 225,000 135,000 $90,000 610,000 290,000 100% 290,000 225,000 $65,000 (b) Prepare all necessary journal entries for 2016. Construction in Process Materials, Cash, Payables, ect. 150,000 Accounts Receivable Billing on Construction 900,000 Cash Accounts Receivable 900,000 Construction in Process Construction Expenses Revenue from Long-term contracts 65,000 150,000 Billings on Construction in Process Construction in Process 610,000 150,000 900,000 900,000 215,000 610,000 (c) Prepare a partial balance sheet for December 31, 2015, showing the balances in the receivables and inventory accounts. CHANCE COMPANY Balance Sheet (Partial) December 31, 2015 Current assets: Accounts Receivable Inventories Construction in process Less: billings Costs and recognized gross profit in excess of billings Amount Amount Amount Formula qattachments_d7859b48f340bd9fcda5230d6c6c8aa4e12e94dc.xlsx, Problem 18-10, Page 3 of 3, 06/04/2016, 15:18:28