Reference no: EM131807472
On February 1, 2016, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,390,000.
During 2016, costs of $2,130,000 were incurred with estimated costs of $4,130,000 yet to be incurred. Billings of $2,630,000 were sent and cash collected was $2,380,000.
In 2017, costs incurred were $2,630,000 with remaining costs estimated to be $3,795,000. 2017 billings were $2,880,000 and $2,605,000 cash was collected.
The project was completed in 2018 after additional costs of $3,930,000 were incurred.
The company's fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion.
Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2016, 2017, and 2018 using the percentage-of-completion method?
2. Prepare journal entries for 2016 to record the transactions described (credit "various accounts" for construction costs incurred). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
Assume Netwoks contracted to provide a customer with Internet infrastructure for s2.600.000 The poject began in 2016 and was completed in 2017.
Data relating to the contract are summarized below: 2016 2017 348,000 1,995,000
Costs incumod during the year 1231 1,392,000
Estimated costs to complete as of 465,000 1,740,000 during the year 274,000 1,810,000
Cash colloctions during the year Required:
Compute the amount of revenue and gross profit or loss to be recognized in 2016 and 201hassuming Nortel recognizes revenue over time according to percentage of completion.
(Use percentages as should be and rounded in the table below to arrive at your final answer. Losses and expenses indicated with a minus sign.)
Estimated total gross profit (loss) Percentages of completion Actual Choose denominator costs to date Estimated total costs complete to date 2016.