The balance sheet of cpm construction company

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Reference no: EM131135911

The Balance Sheet of CPM Construction Company as of 31 December 2013 is given in Table P4.3. Assume that this company is using the POC method of income recognition. Further, assume that 65% of the projects with total bid price of $850,000 have been completed in 2014.

(a) Journalize the following transactions. Identify each transaction as asset, liability, revenue, expense, and so forth (Table P4.4).

(b) Establish relevant accounts for posting. Divide them into categories as Assets, Liabilities, and Net Worth.

(d) Develop the Income Statement for the year 2014.

(e) Develop the Balance Sheet as of 31 December 20X4.

TABLE P4.3 Balance Sheet, CPM Construction Company (31 December, 2013)
Assets		Liabilities
	75,000	Accounts payable	85,000
Cash
	110,000	Notes payable	50,000
Accounts receivable
	300,000	Long-term loans	60,000
Buildings
Less accumulated depreciation	(150,000)	Total liabilities	195,000
on the buildings
	240,000	Net worth
Construction equipment
Less accumulated	(80,000)	Capital stocks	250,000
depreciation on equipment
	20,000	Retained earnings	70,000
Other assets
	515,000	Total net worth	320,000
Total assets
		Total net worth and liabilities	515,000

TABLE P4.4 Transaction for CPM Construction Company
Transaction	Date	Transaction
Number
1	1/2/X4	CPM Co. bought construction equipment for $130,000 for which
		the company paid $15,000 cash and remaining on account.
2	2/4/X4	CPM Co. was billed $20,000 by Smith Material Supplier for cost
		of material.
3	3/4/X4	CPM paid $20,000 to Smith Material Supplier related to
		transaction #2.
4	3/8/X4	CPM billed client for $320,000 (bill #1 on Job 101).
5	4/7/X4	CPM was billed $60,000 by National Rental Co. for renting
		construction equipment.
6	5/8/X4	CPM received $290,000 from client for bill #1 on Job 101.
7	6/7/X4	CPM paid $60,000 to the National Rental Co. for the bill received
		on 4/7/X4.
8	7/3/X4	CPM paid $70,000 cost of labor.
9	8/16/X4	CPM was billed $45,000 by subcontractor.
10	9/16/X4	CPM paid $45,000 to the subcontractor for the bill received on
		8/16/X4.
11	10/1/X4	CPM billed client for $280,000 (bill #2 on Job 101).
12	10/20/X4	Accounts receivable of $20,000 are collected.
13	11/15/X4	CPM received $265,000 from client for bill #2.
14	12/15/X4	Accounts payable of $40,000 are paid.
15	12/25/X4	CPM paid $145,000 in payroll expense.
16	12/30/X4	Dividends paid in the amount of $20,000 to stockholders.
17	12/30/X4	Building depreciation of $30,000 recognized for the year.
18	12/30/X4	CPM depreciates its construction equipment for the total of
		$65,000 each year (this includes also the depreciation of the
		equipment bought on 1/2/X4.)

Reference no: EM131135911

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