Chapter 5
Quiz
A
Wood Construction has contracted to build an office building. At the time of the signing of the contract the cost is estimated to be $50,000,000 and the contract price is $90,000,000. The following data relate to the first two years of the construction period.
2013 2014
Cost during the year $10,000,000 $15,000,000
Estimated costs to complete 40,000,000 35,000,000
Billings during the year 7,000,000 13,000,000
Cash collected during the year 7,000,000 11,000,000
Required
A. Compute the gross profit to be recorded for 2013 AND 2014 (assume the percentage of completion method).
90-50 = 40 gp 90 – 60 = 30 gp
40 x 10/50 = 8 30 x 25/60 = 12. 5
12.5 – 8 = 4.5 mil
Gross Profit 2013____8_____________ Gross Profit 2014_________4.5_______
B. Indicate the balance of the Construction in Process and Billings accounts at Dec. 31, 2014 . Assume percentage of completion method.
Construction in Process _______37.5_________
Costs of 10 and 15 and gp of 8 and 4.5
Billings________20_________
C. Indicate the balance of the Construction in Process account at Dec. 31, 2014. Assume completed contract method.
_______25_________ Costs of 10 and 15
1.Ward, a consultant, keeps her accounting records on a cash basis. During 20X2 Ward collected $200,000 in fees from clients. At December 31, 20X1, Ward had accounts receivable of $40,000. At December 31, 20X2, Ward had accounts receivable of $60,000. On an accrual basis, what was Ward's service revenue for 20X2?
a....