How much is the total amount of expenses to be reported

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Olivia Company is constructing an office building under contract. The contract calls for progress billings and payments of $1,240,000 each quarter. The total contract price is $14,880,000 and the company estimates total costs of $14,200,000. The company estimates that the building will take 3 years to complete and construction commences on 2022. At December 31, 2023 Olivia Company estimates that it is 75% complete with their current construction project; however, the estimate of total costs to be incurred has risen to $14,400,000 due to unanticipated price increases.

Problem a. How much is the difference, debit/(credit) between the construction in progress and the billings on construction in progress reported?

A. (3,380,000) B. 1,240,000 C. 880,000 D. (1,240,000)

Problem b. If the building was 30% completed by the end of 2022, how much is the total amount of expenses to be reported for 2023?

A. 10,800,000 B. 6,540,000 C. 6,390,000 D. 6,300,000

Reference no: EM132939044

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