Problem 18-11

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On July 1, 2020, Coronado Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,880,000. On July 1, Coronado estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022.

		At 12/31/20		At 12/31/21		At 12/31/22
Contract costs incurred to date		$298,000		$1,194,000		$2,098,500
Estimated costs to complete the contract		1,192,000		796,000		0
Billings to Gumbel		300,000		1,100,000		1,820,000

(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any field blank. If an amount should be deducted then enter the amount using either a negative sign prececeding the number e.g. -45 or parenthesis e.g. (45).)

(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any fields blank. If an amount should be deducted then enter the amount using either a negative sign prececeding the number e.g. -45 or parenthesis e.g. (45).)

Need help with section (b). Thank you.

2020 Costs to date (12/31/20) 298000 Estimated costs to Complete 1192000 Estimated Total Costs 1490000 Percent Complete 20 % Revenue Recognized 376000 Costs Incurred (298000) Profit/ (Loss) Recognized in 2020 78000 2021 Costs to date (12/31/21) 1194000 Estimated costs to Complete 796000 Estimated Total Costs 1990000 Contract Price 1880000 Total Profit/Loss 110000 Total Profit/Loss 110000 Gross Profit Recognized in 2020 78000 Profit/ (Loss) Recognized in 2021 188000 2022 Costs to date (12/31/22) 2098500 Estimated costs to Complete 0 2098500 Contract Price 1880000 Total Profit/Loss 218500 Total Profit/Loss 218500 Profit/ (Loss) Recognized in 2021 188000 JK Profit/ (Loss) Recognized in 2020 (78000) 110000 Profit/ (Loss) Recognized in 2022 v 108500 2021 Contract Price 1880000 Estimated Total Costs 1990000 X Profit/ (Loss) Recognized in 2021 (110000) 2022 Costs Incurred 2098500 Contract Price 1880000 Total Profit/ (Loss) on Contract (218500) Profit/(Loss) Recognized in 2021 (110000) Profit/ (Loss) Recognized in 2022 (108500)