Advacc 1 Quiz VIII

Quiz VIII 1.Palmer construction company has consistently used the percentage of completion method of recognizing income. In 20x4 palmer started work on a P3,000,000 construction contract, which was completed in 20x5. The accounting records disclosed the following data: 20x4 20x5 Progress billings 1,100,000 1,900,000 Costs incurred 900,000 1,800,000 Collections 700,000 2,300,000 Estimated cost to completed 1,800,000 How much gross profit should Palmer have recognized in 20x4? 2. C&J construction inc has consistently used percentage of completion method of recognizing income. Last year C&J started work on a P4,500,000 construction contract, which was completed this year. The accounting records disclosed the following data for last year: Progress billings 1,650,000 Costs incurred 1,350,000 Collections 1,050,000 Estimated cost to complete 2,700,000 How much income should C&J have recognized on this contract last year? 3. Shepard construction company uses the percentage of completion method of accounting. On January 10, 20x5, Shepard began work on a P3,000,000 construction contract. At the inception date, the estimated cost of construction was P2,250,000. The following data relate to the progress of the contract: Gross profit recognized at December 31, 20x5 300,000 Costs incurred Jan. 10, 20x5, through Dec. 31, 20x6 1,800,000 Estimated cost to complete at December 31, 20x6 600,000 How much gross profit should Shepard recognized for the year ended December 31, 20x6? 4. Salmon construction company uses the percentage of completion method of accounting. In 20x5, salmon began work on a project which had a contract price of 1,600,000 and estimated costs of 1,200,000. Additional information is as follows: 20x5 20x6 Cost incurred during the year 240,000 1,060,000 Estimated costs to complete as of 12/31/20x5 960,000 Billings during the year 290,000 1,310,000 Collections during the year 250,000 1,200,000 The amount of gross profit Salmon should recognize on this contract during 20x5 is 5. Brown construction company uses the percentage of completion method for long term construction contracts. A specific job was begun in 20x5 and completed in 20x7. The contract price was 1,400,000 and cost information as of each year-end is given below: 20x5 20x6 20x7

End of year estimated cost to complete 400,000 200,000 0 Annual cost incurred 400,000 400,000 120,000 Assuming Brown correctly recorded gross profit in 20x5, how much gross profit should the company record in 20x6? 6. The following data relate to a construction job started by Worthington co. during 20x5: Total contract price 300,000 Actual costs incurred during 20x5 60,000 Estimated remaining cost 120,000 Billed to customer during 20x5 90,000 Received from customer during 20x6 30,000 Under the cost recovery method, how much should Worthington recognize as gross profit for 20x5? 7. In early 20x5, the Miami company signed a contract for construction of an industrial park to be completed in three years. At the time, estimated total cost were P2,250,000. And estimated total revenues were 4,000,000. During 20x5, Miami incurred cost of P960,000 and collected P1,100,000. In December 20x5, Miami recalculated total costs for the project to be P3,200,000 while estimated total revenues remained unchanged. What amount of profit(loss) should be recognized by Miami for 20x5, using the percentage of completion method? 8. In 20x5, Alpha construction began work on a contract with a price of P850,000 and estimated cost of P595,000. Data for each year of the contract are as follows: 20x5 20x6 20x7 Costs incurred during the year 238,000 319,600 105,000 Estimated costs to complete 357,000 139,400 0 Partial billings 260,000 210,000 380,000 Collections 240,000 200,000 410,000 Under the percentage of completion method of revenue recognition, gross profit in 20x5 would be 9. On May 1, 20x5 Green construction company entered into a fixed-price contract to construct an apartment building for P3,000,000. Green appropriately accounts for this contract under the percentage of completion method. Information relating to the contract is as follows: 20x5 20x6 At December 31: Percentage of completion 20% 60% Estimated costs at completion 2,250,000 2,400,000 Income recognized(cumulative) 150,000 360,000 What is the amount of contract costs incurred during the year ended December 31, 20x6? 10. Jessup construction inc. has consistently used the percentage of completion method of recognizing income. During 20x5 Jessup started work on a P1,500,000

fixed-price construction contract. The accounting records disclosed the following data for the year ended December 31, 20x5: Costs incurred 465,000 Estimated cost to complete 1,085,000 Progress billings 550,000 Collections 350,000 How much loss should Jessup have recognized in 20x5? 11. During 20x5 Gates corp. started a construction job with a total contract price of P3,500,000. The job was completed on December 15, 20x6. Additional data are as follows: 20x5 20x6 Actual costs incurred 1,350,000 1,525,000 Estimated remaining costs 1,350,000 --Billed to customer 1,200,000 2,300,000 Received from customer 1,000,000 2,400,000 Under the cost recovery method, what amount should Gates recognize as gross profit for 20x6? 12. Rainbow construction company uses the percentage of completion method for long-term construction contracts. The company started a project with a contract price of P2,750 in 20x5. Given the following data, what is the balance in Construction in Progress for this contract at the end of 20x5? 20x5 20x6 Costs incurred this year 400 500 Total estimated costs remaining at the end of the year 1,600 1,000 13. Lake construction company uses the cost recovery method for long term construction contracts. The information for a specific contract as of January 1, 20x5 is shown below: Costs incurred to date 700,000 Contract price 2,000,000 Estimated remaining cost to complete 800,000 P600,000 of cost was incurred during 20x5 and on December 31, 20x5, the estimated remaining cost to complete was still P800,000. The correct balance for the construction in progress at December 31, 20x5 is 14. In 20x5, Aldaus corp. began construction work under a three-year contract. The contract price is P800,000. Aldaus used 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 presentation relating to this contract at December 31, 20x5 appear below. Balance Sheet Accounts receivable – construction contract billings Construction is progress 50,000 Less contract billings (47,000) Cost of uncompleted contract in excess of billings Income Statement

15,000 3,000

Income (before tax) on the contract recognized in year 1. How much cash was collected in 20x5 on this contract?

10,000

15. In 20x5, Alpha construction began work on a contract with a price of P850,000 and estimated cost of P595,000. Data for each year of the contract are as follows: 20x5 20x6 20x7 Costs incurred during the year 238,000 319,600 105,000 Estimated costs to complete 357,000 139,400 0 Partial billings 260,000 210,000 380,000 Collections 240,000 200,000 410,000 Under the percentage of completion method of revenue recognition, the balance in construction in progress at the end of 20x6 would be? 16. In 20x5, Alpha construction began work on a contract with a price of P850,000 and estimated cost of P595,000. Data for each year of the contract are as follows: 20x5 20x6 20x7 Costs incurred during the year 238,000 319,600 105,000 Estimated costs to complete 357,000 139,400 0 Partial billings 260,000 210,000 380,000 Collections 240,000 200,000 410,000 Under the percentage of completion method of revenue recognition, the net amount reported for construction in progress inventory at the end of 20x6 would be 17. In 20x5, Alpha construction began work on a contract with a price of P850,000 and estimated cost of P595,000. Data for each year of the contract are as follows: 20x5 20x6 20x7 Costs incurred during the year 238,000 319,600 105,000 Estimated costs to complete 357,000 139,400 0 Partial billings 260,000 210,000 380,000 Collections 240,000 200,000 410,000 Under the percentage of completion method of revenue recognition, the net amount reported for construction in progress inventory at the end of 20x6 would be