Project 103: Junior-Senior High School

The initial contract was signed on August 23, 2010. The contractor broke ground on October 1, 2010. Estimated completion date is December 31, 2011. Summary data as of December 31, 2010 year end includes the following:

Item	Amount
Contract Amount	$10,000,000
Quantity Over-run on Piling	$50,000
Total Costs to date	$1,000,000
Amount paid to date	$900,000
Total progress billings to date	$1,500,000
Cash collected to date	$1,300,000
Estimated additional cost to complete	$7,000,000

The contractor continued work on Project 103 during 2011. The contractor was not awarded any additional contracts during 2011. Company operating expense included $300,000 paid and $50,000 unpaid. Summary data as of December 31, 2011 for Project 103 includes the following:

Item	Amount
Contract Amount	$10,000,000
Quantity Over-run on Piling	$50,000
Change order total	$200,000
Total Costs to date	$9,500,000
Amount paid to date	$9,000,000
Total progress billings to date	$10,250,000
Cash collected to date	$9,225,000
Estimated additional cost to complete	$0

The contractor finished Project 101 and 102 in 2011. Actual cost incurred on these projects matched the additional cost to complete estimated on 12/31/2010.

1. Calculate the company net profit before tax for the period ending December 31, 2010 for each of the following revenue recognition methods: cash, billings, percentage of completion, completed contract. Summarize your work in a table as follows: (Hint: The data on Page 1-8 is used to calculate Net Profit before tax with all the five Revenue Recognition Methods from Page 1-9 to Page 1-18.).

Project	Item	Cash	Billings	POC	CC (without absorption)	CC (with absorption)
101	Revenue		$1,000,000			$1,100,000
	Cost
	Gross Profit			$80,000
102	Revenue				$100,000
	Cost			$110,000
	Gross Profit					-$10,000
103	Revenue			$1,256,250
	Cost
	Gross Profit
	Total Gross Profit
	Operating Expense
	Net Profit (before tax)	$431,500