1. The Kunkka Construction Co. started work on three job sites during the current year. Data relating to the three jobs are given below.

Contract Cost Estd. Cost Billings on Collections

price incurred to complete Contract

Batangas 500,000 375,000 0 500,000 400,000

Laguna 700,000 100,000 400,000 100,000 50,000

Sn Fernando 250,000 100,000 100,000 0 0

a. What amount of income should be reported for the current year if the percentage of completion method is used for all contracts?

b. What would be the amount of construction in progress to be reported on the balance sheet if the percentage of completion method is used?

2. Enigma Construction supply co. has used the cost-to-cost percentage method of recognizing revenue. The following incomplete records were provided for a recently completed building project.

2017 2018 2019

Contract price 20,000,000 - -

Gross profit(loss) 400,000 1,400,000 (200,000)

Cost incurred 3,600,000 ? 8,200,000

a. How much cost was incurred in 2018?

b. What percentage of the project was completed by the end of 2018?

c. What was the estimated cost to complete the project at the end of 2018?

3. Magnus Construction is constructing an office building under contract for Leoric Company. The contract calls for progress billings and payments of P930,000 each quarter. The total contract prices P11,160,000 and Magnus estimates total costs of P10,650,000. Magnus estimates that the building will take 3 years to complete and commences construction on January 2, 2016.

a. At December 31, 2016, Magnus estimates that it is 30% complete with the construction, based on costs incurred. What is the total amount of Revenue from Long-Term Contracts recognized for 2016 and what is the balance in the Accounts Receivable account assuming Leoric Cafe has not yet made its last quarterly payment?

b. At December 31, 2017, Magnus Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to P10,800,000 due to unanticipated price increases. What is the total amount of Leoric Expenses that Magnus will recognize for the year ended December 31, 2017?

c. At December 31, 2017, Magnus Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to P10,800,000 due to unanticipated price increases. What is reported in the balance sheet at December 31,2017 for Magnus as the difference between the Construction in Process and the Billings on Construction in Process accounts, and is it a debit or a credit? 5

d. Magnus Construction completes the remaining 25% of the building construction on December 31, 2018, as scheduled. At that time the total costs of construction are P11,250,000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that Magnus will recognize for the year ended December 31,2018?

4. Rubick Construction Co. began operations in 2018. Construction activity for 2018 is shown below. Rubick uses the completed-contract method.

Contract Contract Billings Collections Cost to Estd. Costs to

Price 12/31/18 12/31/18 12/31/18 Complete

1 3,200,000 3,150,000 2,600,000 2,150,000

2 3,600,000 1,500,000 1,000,000 820,000 1,880,000

3 3,300,000 1,900,000 1,800,000 2,250,000 1,200,000

a. Which of the following should be shown on the income statement for 2018 related to Contract 1?

b. Which of the following should be shown on the balance sheet at December 31, 2018 related to Contract 2?

c. Which of the following should be shown on the balance sheet at December 31, 2018 related to Contract 3?

5. Mirana Construction Company had a contract starting April 2018, to construct a 12,000,000 building that is expected to be completed in September 2020, at an estimated cost of 11,000,000. At the end of 2018, the costs to date were 5,060,000 and the estimated total costs to complete had not changed. The progress billings during 2018 were 2,400,000 and the cash collected during 2018 was 1,600,000.

a. For the year ended December 31, 2018, Cooper would recognize gross profit on the building of:

b. At December 31, 2018 Cooper would report Construction in Process in the amount of: