2014 2015 2020

Contract price $ 10,000,000 $ 10,000,000 $ 10,000,000

Actual costs to date $ 2,550,000 $ 6,800,000 $ 8,670,000

Estimated costs $ 5,950,000 $ 1,700,000
total estimated costs $ 8,500,000 $ 8,500,000 $ 8,670,000

Estimated gross profit (loss) $ 1,500,000 $ 1,500,000 $ 1,330,000

revenue recognition

2014:(2550000/8500000)= 30%
30%*1000000= $ 3,000,000

2015= 80%
8000000-3000000 $ 5,000,000

2020:10000000-3,000,000-5000000= $ 2,000,000

Gross profit (loss) recognition:

2018:3000000-2550000= $ 450,000
2019:5000000-4250000= $ 750,000
2020:2000000-1870000= $ 130,000

Journal entries
2015 2016 2020
Debit Credit Debit Credit Debit Credit

Construction in progress $ 2,550,000 $ 4,250,000 $ 1,870,000

Various accounts $ 2,550,000 $ 4,250,000 $ 1,870,000

Accounts receivable $ 2,050,000 $ 4,750,000 $ 3,200,000

Billings on construction contract $ 2,050,000 $ 4,750,000 $ 3,200,000

Cash $ 1,825,000 $ 4,100,000 $ 4,075,000

Accounts receivable $ 1,825,000 $ 4,100,000 $ 4,075,000

Construction In progress $ 450,000 $ 750,000 $ 130,000

Cost of construction $ 2,550,000 $ 4,250,000 $ 1,870,000
Revenue from long term contracts $ 3,000,000 $ 5,000,000 $ 2,000,000

Ques 3 Balance sheet

2018 2019
Current Assets:
Accounts receivable $ 225,000 $ 875,000
Construction in progress $ 3,000,000 $ 8,000,000
Less:billings $ (2,050,000) $ (6,800,000)
Cost and profit in excess of billings $ 950,000 $ 1,200,000

Current liabilities
Ques 4
2018 2019 2020
Contract price $ 10,000,000 $ 10,000,000 $ 10,000,000

Actual costs to date $ 2,550,000 $ 6,375,000 $ 9,600,000

Estimated costs $ 5,950,000 $ 3,125,000
total estimated costs $ 8,500,000 $ 9,500,000 $ 9,600,000

Estimated gross profit (loss) $ 1,500,000 $ 500,000 $ 400,000

revenue recognition

2014:(2550000/8500000)= 30%
30%*1000000= $ 3,000,000

2019:(6375000/9500000)= 67%
(67%*10000000)-3000000= $ 3,710,526

2020:10000000-3,000,000-3710526= $ 3,289,474

Gross profit (loss) recognition:

2018:3000000-2550000= $ 450,000
2019:3710526-3825000= $ (114,474)
2020:3289474-3225000= $ 64,474

Ques 5
2018 2019 2020
Contract price $ 10,000,000 $ 10,000,000 $ 10,000,000

Actual costs to date $ 2,550,000 $ 6,375,000 $ 10,350,000

Estimated costs $ 5,950,000 $ 4,150,000
total estimated costs $ 8,500,000 $ 10,525,000 $ 10,350,000

Estimated gross profit (loss) $ 1,500,000 $ (525,000) $ (350,000)

revenue recognition

2014:(2550000/8500000)= 30%
30%*1000000= $ 3,000,000

2019:(6375000/10525000)= 61%
(61%*10000000)-3000000= $ 3,057,007

2020:10000000-3,000,000-3057007= $ 3,942,993

Gross profit (loss) recognition:

2018:3000000-2550000= $ 450,000
2019:(525000)-450000= $ (975,000)
2020:(350000)-(975000)-450000= $ 175,000