A Construction Company Signed a Contract to Build a Plant

question 24

Essay

A construction company signed a contract to build a plant for a customer. Construction covered a four-year period. Data concerning the construction were as follows:
Contract price = $780,000
Estimated costs = $600,000
Actual results: $\begin{array} { | l | l | l | } \hline & \text { Actual cost } & \text { Billings } \\\hline \text { Year 1* } & \$ 120,000 & \$ 100,000 \\\hline \text { Year 2* } & 100,000 & 110,000 \\\hline \text { Year 3* } & 240,000 & 240,000 \\\hline \text { Year 4* } & 160,000 & 330,000 \\\hline\end{array}$ *No change in estimated costs.
Using the information above, answer the following questions:
(a) How much income will be reported in Years 1, 2, 3, and 4 if the completed contract method is used?
Year 1: $
Year 2: $
Year 3: $
Year 4: $
(b) How much income will be reported each year if the percentage-of-completion method is used?
Year 1: $
Year 2: $
Year 3: $
Year 4: $
(c) What net amount would be reported on the balance sheet for contracts in process at the end of year 1 if the completed contract method is used?
$
(d) What net amount would be reported on the balance sheet for contracts in process at the end of year 1 if the percentage-of-completion method is used?
$

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