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What was the initial estimated total income before tax

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Reference no: EM131829105

Problem - Analysis of Percentage-of-Completion Financial Statements

In 2010, Steinrotter Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Steinrotter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2010, follow.

Balance Sheet

Accounts receivable-construction contract billings

 

$18,000

Construction in progress

$65,000

 

Less: Contract billings

61,500

 

Cost of uncompleted contract in excess of billings

 

3,500

Income Statement

Income (before tax) on the contract recognized in 2010

 

$19,500

What was the initial estimated total income before tax on this contract?

Reference no: EM131829105

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