Craft Construction
Craft Construction Entered into a Contract to Construct

question 29

Essay

Craft Construction
Craft Construction entered into a contract to construct a generator station for a utility customer. The project was started in 2016 and completed in 2017. Cost and other information is presented below.
$$\begin{array} { l r c } & \underline { 2016 } & \underline { 2017 } \\\text { Costs incurred during the year } & \$ 225,000 & \$ 550,000 \\\text { Estimated costs to complete } & 450,000 & - 0 - \\\text { Billings during the year } & 200,000 & 700,000 \\\text { Cash collections during the year } & 150,000 & 750,000\end{array}$$
-Refer to Craft Construction. Assume Craft uses the completed-contract method for revenue recognition. Compute the amount of gross profit for 2016 and 2017.

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Definitions:

Corporate Beneficiary

An entity that is designated to receive benefits or proceeds from a legal instrument, such as a trust, will, or insurance policy, in a corporate context.

International Beneficiary

An individual or entity in a different country designated to receive benefits or assets from a legal arrangement or instrument.

Outstanding Mortgage

The remaining balance of a mortgage that is still owed by the borrower to the lender.

Mortgage Payment

Periodic payments made by a borrower to a lender, typically comprising both principal and interest, for the repayment of a mortgage loan.