Reference no: EM131211319
Smokey International Inc recently aquired the Kurtz Builders Company. Kurtz has incomplete accounting records. On one particular project, only the information below is available.
Cost incurred during year ..... 2014 $200,000.00, 2015 $250,000.00. , 2016 ?
Estimated cost to complete ..... 2014 - $450,000.00, 2015 - $190,000.00, 2016 $0
Recognized Revenue ..... 2014 - $220,000.00, 2015 - ?, 2016 - ?
Gross profit on contract ..... 2014 - ?, 2015 - $10,000, 2016 - (10,000)
Contract Price .... 2014 - $850,000
Because the information is incomplete, you are asked the following questions assuming the percentage-of-completion method is used, an output measure is used to estimate the percentage completed, and revenue is recorded using the actual cost approach.
1. How much gross profit should be reported in 2014?
2. How much revenue should be reported in 2015?
3. How much revenue should be reported in 2016?
4. How much cost was incurred in 2016?
5. What are the total costs on the contract?
6. What would be the gross profit for 2015 if the cost to cost perecentage of completion method were used rather than the output measure?
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