Reference no: EM132945095
On March 1, 2018, Roman Construction Company was contracted to construct a warehouse building for Sunflower Manufacturing Company for total contract price of P8,400,000.
The following data are available for the 3 years:
12/31/2018
Contract costs incurred during the yr. - 3,200,000
Est. costs to complete at 12/31 - 3,200,000
Progress billings each year - 3,200,000
12/31/2019
Contract costs incurred during the yr. - 2,600,000
Est. costs to complete at 12/31 - 1,450,000
Progress billings each year - 3,500,000
12/31/2020
Contract costs incurred during the yr. - 1,450,000
Est. costs to complete at 12/31 - 0
Progress billings each year - 1,700,000
Roman Construction Company uses the percentage of completion method for accounting for long term contracts.
Problem 1: The billings in excess of costs or the cost in excess of billings to be reported in the balance sheet as of December 31, 2019 is:
a. P20,000 excess of costs over billings
b. P20,000 excess of billings over costs
C. P900,000 excess of costs over billings
d. P900,000 excess of billings over costs.