Magnum Construction Contracted to Construct a Factory Building for $545,000

question 60

Essay

Magnum Construction contracted to construct a factory building for $545,000.The company started during 2012 and was completed in 2013.Information relating to the contract is as follows:
$\begin{array} { | l | c | c | } \hline & \mathbf { 2 0 1 2 } & \mathbf { 2 0 1 3 } \\\hline \text { Costs incured during the year } & \mathbf { 3 1 0 , 0 0 0 } & \mathbf { 1 7 0 , 0 0 0 } \\\hline \text { Estinated additional cost to complete } & 165,000 & \cdots \\\hline \text { Billings during the year } & 280,000 & 285,000 \\\hline \text { Cash collections during the year } & 260,000 & 305,000 \\\hline\end{array}$
Required:
Record the preceding transactions in Magnum's books under completed-contract and the percentage of completion methods.Determine amounts that will be reported on the balance sheet at the end of 2012.

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Definitions:

Epiglottis

Plate of elastic cartilage covered with mucous membrane; serves as a valve over the glottis of the larynx during swallowing.

Larynx

The voice box; a structure in the throat containing the vocal cords, responsible for producing sound and protecting the airway during swallowing.

Cardiac Sphincter

A muscular valve located between the esophagus and the stomach, preventing acid reflux from the stomach back into the esophagus.

Pyloric Sphincter

Thickening of the circular layer of the gastric musculature encircling the junction between the stomach and duodenum; also called pylorus.