On January 1, 2007, a Corporation Signed a Contract to Build

question 51

Essay

On January 1, 2007, a corporation signed a contract to build a specially designed plant; the relevant data were (in 000's):
Contract price = $13,500
Estimated total construction cost = $10,500
Data during construction period (January, 1, 2007-December 31, 2008): $\begin{array}{|l|l|l|}\hline & \mathbf{1 2 / 3 1 / 2 0 0 7} & \mathbf{1 2 / 3 1 / 2 0 0 8} \\\hline \text { Actual cost to date (cumulative) } & \$ 2,160 & \$ 10,875 \\\hline \text { Actual progress billings to date (cumulative) } & 2,100 & 13,500 \\\hline \text { Actual collections to date (cumulative) } & 2,055 & 13,500 \\\hline \text { Estimated remaining cost to complete } & 8,640 & -0- \\\hline\end{array}$ Required:
(1) Give the following amounts that should be reported on the income statement and balance sheet: $\begin{array}{|l|l|l|l|l|}\hline \text { Item } &{\text { Completed Contract }} && \text { Percentage-of-Completion } \\\hline & 2007 & 2008 & 2007 & 2008 \\\hline \text { (a) Income from construction } & & & & \\\hline \text { (b) Accounts receivable } & & & & \\\hline \text { (c) Invoice construction (net asset) } & & & & \\\hline\end{array}$ (2) Give the entry to record 2007 construction income at December 31, 2008, for the percentage-of-completion method.