AC 302 Chapter 18 Problem Question 3

AC 302 Chapter 18 Problem Question 3
Name					Date			
Instructor					Course			
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield								
Primer on Using Excel in Accounting by Rex A Schildhouse								
								
P18-3 (Recognition of Profit and Entries on Long-Term Contract) On March 1, 2012, Chance Company entered								
into a contract to build an apartment building. It is estimated that the building will cost 						$2,000,000 	and will take 3 years 	
to complete. The contract price was			$3,000,000 	The following information pertains to the construction period.				
								
			2012	2013	2014			
Costs to date:			$600,000 	$1,560,000 	$2,100,000 			
Estimated costs to complete:			1,400,000 	520,000 	0 			
Progress billing to date:			1,050,000 	2,000,000 	3,000,000 			
Cash collected to date:			950,000 	1,950,000 	2,850,000 			
								
Instructions:								
(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.								
								
Gross profit recognized in:								
								
			2012		2013	2005	2014	
Contract price				Amount		Amount		Amount
Costs:								
Costs to date			Amount		Amount		Amount	
Estimated costs to complete			Amount	Formula	Amount	Formula		Formula
Total estimated profit				Formula		Formula		Formula
Percentage completed to date				Formula		Formula		Formula
Total gross profit recognized				Formula		Formula		Formula
Less: GP recognized in previous years				Amount		Formula		Formula
Gross profit recognized in current year				Formula		Formula		Formula
								
								
(b) Prepare all necessary journal entries for 2014.								
								
	Account Title					Amount		
	Account Title						Amount	
								
	Accounts Receivable					Amount		
	Account Title						Amount	
								
	Account Title					Amount		
	Account Title						Amount	
								
	Account Title					Amount		
	Account Title					Amount		
	Account Title						Amount	
								
	Account Title					Amount		
	Account Title						Amount	
								
(c) Prepare a partial balance sheet for December 31, 2013, showing the balances in the receivables and inventory accounts.								
								
	CHANCE COMPANY							
	Balance Sheet (Partial)							
	December 31, 2013							
	Current assets:							
	Title					Amount		
	Inventories							
	Title				Amount			
	Less:  Title				Amount			
	Costs and recognized gross profit in excess of billings					Formula