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Chapter 08 Dayag
Chapter 08 Dayag
Chapter 08 Dayag
Problem I
1.Input Measure - Percentage of Completion Method (Cost to Cost Method)
2008:
Contract price P 1,800,000
Actual costs to date P 450,000
Estimated costs to complete 1,200,000
Total estimated project costs 1,650,000
Estimated total gross profit 150,000
Percentage of completion:
P450,000 / P,1650,000 27.27%
Gross profit recognized P 40,905
2009: P 1,800,000
Contract price
Costs incurred:
2008 P 450,00
2009 1,100,000
Total cost 1,550,000
Total gross profit 250,000
Recognized in 2008 40,905
Recognized in 2009 P 209,095
Problem II
1.Input Measure - Percentage of Completion Method (Cost to cost Method)
Years Gross Profit (or Supporting computations
Loss) recognized
2008 P 2 million (P108 – 90) x (P30/P90) = P6
million
2009 ( P18 million) Total loss is (P108 –120) = (P12
million) To date, P6 million was
recorded: therefore, (P12 million) –
P6 million = (P18 million) in 2009
2010 P 10 million Total loss is P 108 – 110) = (P2
million) To date, (P 12 million was
recorded: therefore, ( P2 million) –
(P12 million)
= P10 million in 2010
2.Input Measure - Cost Recovery Method
Years Gross Profit (or Loss) Supporting computations
2008 P -0- ( P108 – 90) = P18 anticipated
gross profit, so no need to
recognized a
gross loss
2009 (P 12 million) Total loss is ( P108 – 120) = (12
million)
2010 P 10 million Total loss is (P108- 110) – ( P2
million) To date, ( P12 million was
recorded: therefore, ( P2 million) –
( P12 million)
= P10 million in 2010
Problem III
1. Journal Entries
a. Input Measure – Percentage of completion – (cost-to-cost method)
The following analysis is to determine the percentage of completion:
20x3 20x4 20x5
Contract price:
Initial amount of contract…………... P528,000 P528,000 P528,000
Variation……………………………….. - 12,000 12,000
Total contract price…………………….. P528,000 P540,000 P540,000
Costs incurred each year……………… P 126,048 *P244,032 P121,920
Add: Costs incurred in prior years……. - _126,048 _370,080
Actual costs incurred to date (1)…..… P126,048 *P370,080 P492,000
Add: Estimated costs to complete….. _358,752 _121,920 -
Total estimated costs (3)……..………… P484,800 P492,000 P492,000
Estimated gross profit…………………… P 43,200 P 48,000 P 48,000
Percentage of completion (1) / (3) 26% **74% 100%
* including the P7,200 additional costs in 20x4.
** it should be noted that the percentage of completion for 20x4 is calculated by deducting the P6,000 of
materials held for the following period from the costs incurred up to that year end, i. e., P370,080 – P6,000 =
P364,080, P364,080
/ P492,000 = 74%.
The revenue, expenses (costs) and profit will be recognized in profit or loss as follows:
Recognized in Recognized in
20x3 To date prior years current year
Revenue (P528,000 x 26%) P 137,280 - P 137,280
Costs/Expenses (P484,800 x 26%) 126,048 - 126,048
Gross Profit (P43,200 x 26%) P 11,232 - P 11,232
Recognized in Recognized in
20x4 To date prior years current year
Revenue (P540,000 x 74%) P 399,600 P 137,280 P 262,320
Costs/Expenses (P492,000 x 74%) _364,080 _126,048 238,032
Gross Profit (P48,000 x 74%) P 35,520 P 11,232 P 24,288
Recognized in Recognized in
20x5 To date prior years current year
Revenue (P540,000 x 100%) P 540,000 P 399,600 P 140,400
Costs/Expenses (P492,000 x 100%) _492,000 _364,080 _127,920
Gross Profit (P48,000 x 100%) P 48,000 P 35,520 P 12,480
Alternatively, the gross profit recognized each year may also be computed as follows:
20x3 20x4 20x5
Contract price:
Initial amount of contract…………....... P528,000 P528,000 P528,000
Variation…………………………………… - 12,000 12,000
Total contract price………………………… P528,000 P540,000 P540,000
Costs incurred each year…………………. P126,048 P240,032 P121,920
Add: Costs incurred in prior years……….. - _126,048 _370,080
Actual costs incurred to date (1)…..……. P126,048 P370,080 P492,000
Add: Estimated costs to complete……… _358,752 _121,920 -
Total estimated costs (3)……..……………. P484,800 P492,000 P492,000
Estimated gross profit……………………… P 43,200 P 48,000 P 48,000
Percentage of completion (1) / (3)……... 26% 74% 100%
Gross profit to date…………………………. P 11,232 P 35,520 P 48,000
Less: Gross profit in prior years……………. - 11,232 35,520
Gross profit in current year -% of completion P 11,232 P 24,288 P 12,480
Gross profit in current year –cost recovery P 0 P 0 P 48,000
method
3. To record collections:
Cash…………………………………..... 120,000 228,000 192,000
Accounts receivable…………… 120,000 228,000 192,000
5. To close Construction In
Progress**
and Progress Billings account:
Progress billings……………………… 540,000
Construction In Progress………. 540,000
* The term “Contract account” may alternatively be used.
** If “Contract account” is used then no entry is required for No. 5.
The revenue, expenses (costs) and profit will be recognized in profit or loss as follows:
Recognized in Recognized in
20x3 To date prior years current year
Revenue* P 126,048 - P 126,048
Costs/Expenses 126,048 - 126,048
Gross Profit P 0 - P 0
*equivalent to costs incurred
Recognized in Recognized in
20x4 To date prior years current year
Revenue* P 364,080 P 126,048 P 238,032
Costs/Expenses _364,080 126,048 238,032
Gross Profit P 0 P 0 P 0
*equivalent to costs incurred
Recognized in Recognized in
20x5 To date prior years current year
Revenue (P540,000 x 100%) P 540,000 P 364,080 P 175,200
Costs/Expenses (P492,000 x 100%) _492,000 364,080 127,920
Gross Profit (P48,000 x 100%) P 48,000 P 0 P 48,000
Alternatively, the gross profit recognized each year may also be computed as follows:
20x3 20x4 20x5
Contract price:
Initial amount of contract…………....... P528,000 P528,000 P528,000
Variation…………………………………… - 12,000 12,000
Total contract price………………………… P528,000 P540,000 P540,000
Costs incurred each year…………………. P 126,048 P244,032 P 121,920
Add: Costs incurred in prior years……….. - _126,048 _370,080
Actual costs incurred to date ……...……. P 126,048 P370,080 P492,000
Add: Estimated costs to complete……… _? _? -
Total estimated costs …….…..……………. P ? P ? P492,000
Estimated gross profit………………………. P 0 P 0 P 48,000
Percentage of completion……………….. _ - _ - 100%
Gross profit to date…………………………. P 0 P 0 P 48,000
Less: Gross profit in prior years……………. - - 0
Gross profit in current year………………... P 0 P 0 P 48,000
3. To record collections:
Cash…………………………………..... 120,000 228,000 192,000
Accounts receivable…………… 120,000 228,000 192,000
4. To recognize Revenue, Costs
and Gross Profit:
Construction Expenses……………… 126,480 238,032 127,920
Construction in Progress*..……….... 48,000
Revenue from Construction...... 126,480 238,032 175,920
5. To close Construction In
Progress**
and Progress Billings account:
Progress billings……………………… 540,000
Construction In Progress………. 540,000
* The term “Contract account” may alternatively be used.
** If “Contract account” is used then no entry is required for No. 5.
Current Liability:
Payables (“Payments on Account”)
Progress billings……………………………… P144,000
Less: Construction In Progress……………. _137,280
Gross amount due to customers………… P 6,720
3.Gross Profit
a.Input Measure - Percentage of Completion Method (refer to requirement 1 for
detailed computation)
20x3 20x4 20x5
Revenue……………………………………… P 137,280 P 262,320 P 140,400
Less: Costs / Expenses……………………... _126,048 _238,032 _127,920
Gross Profit……………………………………. P 11,232 P 24,288 P 12,480
b. Input Measure – Cost Recovery Method (refer to requirement 1 for detailed computation)
20x3 20x4 20x5
Revenue……………………………………… P 126,048 P 238,032 P 175,920
Less: Costs / Expenses……………………... _126,048 _238,032 _127,920
Gross Profit……………………………………. P 0 P 0 P 48,000
Problem IV
1.Anticipated/Gross Loss
a. Input Measure – Percentage of Completion (Cost-to-Cost Method)
2008:
Contract price P2,500,000
Actual cost to date P1,500,000
Estimated costs to complete 1,200,000
Total estimated project costs 2,700,000
Estimated loss, recognized in 2008 P (200,000)
2009:
Contract price P 2,500,000
Costs incurred: In 2008 P1,500,000
In 2008 1,300,000
Total cost 2,800,000
Total loss P (300,000)
Recognized in 2008 (200,000)
Recognized in 2009 P (100,000)
2.Journal Entries
a. Input Measure – Percentage of Completion (Cost-to-Cost Method)
2008:
Construction in progress 1,500,000
Various credits 1,500,000
Cash 1,000,000
Accounts receivable 1,000,000
Cash 1,500,000
Accounts receivable 1,500,000
*P2,500,000 (P1,500,000/P2,700,000)
** P2,500,000 1,388,889
Problem V
I tem to compute Answer
Total revenue recognized during 2009 (w): P50 million
CIP contains cost + gross profit = revenue, so w = P50 P 15 million
Gross profit recognized during 2009 (x): P50 – P35 = P15
Billings on construction (y) : P14 + P 46 = P60 P60million
Net billings in excess of construction in progress (z): Billings of P60 – CIP P10 million
of P50
Calculate the percentage of PAC that was completed during 2009:
50/150 = 33.33% 333.33%
Problem VI
I tem to compute Answer
Cash collected by KP on Cincy One during 2009. (P75 billings – P10 P65 million
A/R)
Actual costs incurred by KP on Cincy One during 2009 (P66 CIP – P22 P44 million
gross pofit)
At 12/31/2009, the estimated remaining costs to complete Cincy One P156 million
(44/{44 + x})(300 – {44 + x}) = 22; x = 156
The percentage of Cincy One that wa completed during 2009 100 x 22%
(44/
{44 + 156})
Problem VII
1.
Progress billings on construction contract P562,000
Less accounts receivable 150,500
Cash collected in 20x4 P411,500
2.
Gross profit from construction contract + Construction in progress = Revenue
for 20x4 P301,000 + P602,000 = P903,000
P903,000/P7,525,000 = 12% Percentage completed in 20x4
P301,000/.12 = P2,508,333 Estimated income on construction
contract
Problem VIII
1.Percentage of Completion Method (Cost-to-cost Approach)
20x4 20x5 20x6
Contract price ................... P250,000 P250,000 P250,000
Current year costs ............... 110,000 120,000 15,000
Costs to date .................... 110,000 230,000 245,000
Estimated cost to complete ....... 100,000 20,000 0
Estimated total cost ............. 210,000 245,000 240,000
Estimated total gross profit ..... 40,000 5,000 5,000
Percent complete ................. 52% 94% 100%
Revenue to date .................. P130,000 P230,000 P250,000
Problem IX
1. Percentage of Completion Method (Cost-to-cost Approach)
*P150,000 + 7,500 + 157,500 + 100,000 costs incurred during the year – 27,500 loss
P7,200,000
——————————— x (P15,000,000 – P12,000,000) = P1,800,000.
3. c P7,200,000 + $4,800,000
P1,170,000
—————- x (P3,300,000 – P1,950,000) =
P810,000 P1,950,000
Construction-In-Progress
CI in 2004 210,000
RGP in 20x4 (?) 34,000
End of 20x4 244,000
CI in 20x5 384,000
RGP in 20x5 (?) 100,000
5. b P1,200,000
————— x (P7,200,000 – P4,800,000) = P600,000.
P4,800,000
7. a
20x4
Contract Price P4,800,000
x: Percentage-of-completion 75%
Recognized Revenue to date P3,600,000
Less: Costs incurred to date P3,400,000
Gross Profit to date P 200,000
Less: GP in prior year -0-
Gross profit in current year P
200,000
8. a P3,600,000
————— x (P8,400,000 – P6,000,000) =
P1,440,000. P6,000,000
11. a - Gross profit is recognized in the year of sale, 20x4; therefore, in 20x6 no gross profit
should be realized.
12. c P600,000
—————————— x (P1,500,000 – P1,000,000) =
P300,000 P600,000 + P400,000
14. b
20x4: Cost to date – P7,500,000 x 20% P1,500,000
20x5: Cost to date – P8,000,000 x 60% 4,800,000
Cost incurred during 20x5 P3,300,000
16. b
Costs Incurred 50,000
Contract price………………………………………. P260,000
Cost incurred each year………………………….. P 50,000
Add: Cost incurred in prior year…………………. -0-
Costs incurred to date…………………………….. P 50,000
Add: Estimated costs to complete……………… 150,000
Total estimated costs………………………………. P200,000
Estimated gross profit (loss)………….……………. P60,000)
Multiplied by: percentage of completion……….. 50/200 15,000
Construction In Progress account 65,000
Less: Progress billings 30,000
Construction In Progress account (net) or Due from customers 35,000
17. d - P2,040,000 – P980,000 = P1,060,000 (revenue limited to costs incurred since cost-
recovery method must be used).
18. a - P2,040,000 – (P1,000,000 + P1,000,000) = P40,000.
19. c - (P1,000,000 + P1,000,000) – (P648,000 + P1,280,000) = P72,000.
20. d
21. d
Recognized gross profit (loss) to date………….. P( 100,000)
Less: Recognized gross profit in prior years……. 20,000
Recognized gross profit each year…………….. P (120,000)
23. c
Prior year Current year
Contract price………………………………………. P7,000,000 P7,000,000
Cost incurred each year…………………………..
Add: Cost incurred in prior year………………….
Costs incurred to date…………………………….. P5,000,000
Add: Estimated costs to complete……………… 2,800,000
Total estimated costs………………………………. P7,800,000
Estimated gross profit (loss)………….……………. (P 800,000)
Multiplied by: percentage of completion……….. 100%
Recognized gross profit (loss) to date………….. P600,000 (P 800,000)
Less: Recognized gross profit in prior years……. 600,000
Recognized gross profit each year…………….. (P1,400,000)
P240,000
————————— x (P2,400,000 – Total estimated cost) =
P60,000 Total estimated cost
35. d - P85M costs incurred in 2011 = revenue recognized in 2011. Under the costs
recovery (zero- profit approach) of construction accounting, revenue is recognized up to
the extent of costs incurred as long as it is probable will be recoverable.
P1,050,000.
40. a
Under PFRS, the excess of Construction In Progress amounting to P2,100,000
(P2,250,000 – P150,000, loss) – P1,900,000, billings = P200,000 is classified as due
from customers.
41.c
Costs of construction 1,200,000
Construction in progress 800,000
Revenue for long-term contracts 2,000,000
Percentage complete = P1,200,000 / (P1,200,000 +P600,000) =
2/3 Revenue recognized = 2/3 P3,000,000 = P2,000,000
Cost recognized = P1,200,000
Gross profit recognized = P2,000,000 P1,200,000 = P800,000
42. a
Costs of construction P1,200,000
Profit 800,000
Construction In Progress P2,000,000
Less: Progress billings 1,500,000
Excess (Due from customers) P 500,000
43.b
Costs of construction 600,000
Construction in progress 400,000
Revenue for long-term contracts 1,000,000
Total revenue P3,000,000 revenue previously recognized P2,000,000 = Revenue
to recognize this year P1,000,000.
Cost recognized = P600,000
Gross profit recognized = P1,000,000 P600,000 = P400,000
44. d
Costs of construction 1,200,000
Revenue for long-term contracts 1,2000,000
Under cost recovery method, revenue should be recognized up to the extent of costs
incurred.
45. b
Costs of construction P1,200,000
Profit 0
Construction In Progress P1,200,000
Less: Progress billings 1,500,000
Excess (Due to customers) P( 300,000)
46. d
Costs of construction 600,000
Construction in progress 1,200,000
Revenue for long-term contracts 1,800,000
Under the cost recovery method, record equal amounts of revenue and cost until cost
recovered, and then record gross profit. In 20x4, recorded revenue and cost of
P1,200,000, so record remaining cost of P600,000 and all gross profit of P1,200,000 in
20x5.
47.a
20x4 20x5
Contract price P 9,600,000 P10,080,000
Costs incurred to date P 4,920,000 P 8,640,000
Add: Estimated cost to complete 4,920,000 2,160,000
Total estimated costs P 9,840,000 P 10,800,000
Estimated Gross Profit (loss) P(240,000) P (720,000)
Multiply by: % of completion 100% 100%
Recognized Gross Profit (Loss) to date P (240,000) P (720,000)
Less: Gross Profit (Loss) in prior year (240,000)
Recognized Gross Profit (Loss) in current year P (240,000) P (480,000)
4,680,000 5,280,000
CI3,720,000480,000 loss 3,420,000
7,920,000 8,700,000
due to customers
P780,000
48. d
Percentage of Completion: Project 6 Project 7 Project 8
Contract price………………………….. P500,000 P700,000 P250,000
Cost incurred each year………………. P375,000 P100,000 P100,000
Add: Cost incurred in prior year………
Costs incurred to date………………… P375,000 P100,000 P100,000
Add: Estimated costs to compute……. 400,000 100,000
Total estimated costs…………………. P375,000 P500,000 P200,000
Estimated gross profit………………… P125,000 P200,000 P 50,000
Multiply by: percentage of completion. 100% 20% 50%
Recognized gross profit to date……… P125,000 P 40,000 P 25,000
Less: Recognized gross profit in prior
years
Recognized gross profit each year…. P125,000 P 40,000 P 25,000
49.a
Input Measures: Efforts-Expended Method - using timbers laid
Year 2 Year 3
Timers laid Each Year 300 500
Add: Timbers laid in Prior Years 150 450
Timbers laid to date 450 950
Add: Additional support timbers to be laid 520 -0-
Total Estimated Timbers 970 950
Percentage-of-Completion 45/97 100%
x: CONTRACT PRICE P 800,000 P 800,000
Recognized Revenue to Date P 371,134 P 800,000
Recognized Revenue in Prior Years 371,134
Recognized Revenue in Current Yr. P 428,866
50. b
2006 2007 2008
Contract price………………………….. P5,000,000 P5,000,000 P5,000,000
Cost incurred each year………………. P2,050,000
Add: Cost incurred in prior year……… 900,000 2,550,000
Costs incurred to date………………… P 900,000 P2,550,000 P4,600,000
Add: Estimated costs to complete 1,700,000 -0-
Total estimated costs…………………. P4,250,000 P4,600,000
Estimated gross profit………………… P 750,000 P 400,000
Multiply by: percentage of completion. 60% 100%
Recognized gross profit to date……… P 100,000 P 450,000 P 400,000
Less: Recognized gross profit in prior -0- 100,000 450,000
years
Recognized gross profit each year…. P 100,000 P 350,000 P( 50,000)
52. c
Contract Price……………………………………………… P60,000,000
Less: Total Estimated Costs
Cost Incurred to Date ...............................................P26,000,000
Add: Estimated Costs to Complete……………… 25,000,000 51,000,000
Estimated Gross Profit……………………………………. P 9,000,000
Multiplied by: % of completion…………………………. 30%
Recognized gross profit to date……………………….. P 2,700,000
Less: RGP in prior years…………………………………… 0
Recognized gross profit in current year……………… P 2,700,000
Construction-in-progress Account:
Costs incurred to date………………………………….. P
26,000,000 GP in the current year…………………………………… 2,700,000
P 28,700,000
Less: Progress billings…………………………………….. 5,000,000
Due from customer (net)………………………………. P 23,700,000
53.c
Contract Price P100,000,000
Multiplied by: Gross Profit Rate 25%
Estimated Gross Profit of the entire contract P 25,000,000
Multiplied by: Percentage of Completion for first year 50%
54. c
55. a Gross Profit realized for current year P 12,500,000
Quiz- VIII
1. P100,000 = [P900,000 ÷ (P900,000 + P1,800,000)] × P3,000,000 =
P1,000,000 P1,000,000 – P900,000 = P100,000.
2. P150,000
Contract price 4,500,000
Costs incurred to date 1,350,000
Add: Estimated cost to complete _2,700,000
Total estimated costs 4,050,000
Estimated Gross Profit (loss) 450,000
Multiply by: % of completion 1,350/4,050
Recognized Gross Profit (Loss) to date 150,000
Less: Gross Profit (Loss) in prior year -0-
Recognized Gross Profit (Loss) in current year 150,000
3. P150,000
20x5 20x6
Contract price 3,000,000 3,000,000
Costs incurred to date 1,800,000
Add: Estimated cost to complete _600,000
Total estimated costs 2,250,000 2,400,000
Estimated Gross Profit (loss) 750,000 600,000
Multiplied by: % of completion 1,800/2,400
Recognized Gross Profit (Loss) to date 300,000 450,000
Less: Gross Profit (Loss) in prior year _300,000
Recognized Gross Profit (Loss) in current year 150,000
4. P80,000
20x5
Contract price 1,600,000
Costs incurred to date 240,000
Add: Estimated cost to complete _960,000
Total estimated costs 1,200,000
Estimated Gross Profit (loss) 400,000
Multiplied by: % of completion 240/1,200
Recognized Gross Profit (Loss) to date 80,000
Less: Gross Profit (Loss) in prior year 0
Recognized Gross Profit (Loss) in current year 80,000
5. P20,000
20x5 20x6
Contract price 1,400,000 1,400,000
Costs incurred each year 400,000 400,000
Add: Cost incurred in prior years -0- 400,000
Costs incurred to date 400,000 800,000
Add: Estimated cost to complete _400,000 200,000
Total estimated costs 800,000 1,000,000
Estimated Gross Profit (loss) 600,000 400,000
Multiplied by: % of completion 400/800 800/1,000
Recognized Gross Profit (Loss) to date 300,000 320,000
Less: Gross Profit (Loss) in prior year 0 300.000
Recognized Gross Profit (Loss) in current year 300,000 20,000
6. P-0- , Under the cost recovery method, record equal amounts of revenue and cost until
cost recovered, and then record gross profit
7. P240,000 Profit
20x5
Contract price 4,000,000
Costs incurred each year 960,000
Add: Cost incurred in prior years 0
Costs incurred to date 960,000
Add: Estimated cost to complete
Total estimated costs 3,200,000
Estimated Gross Profit (loss) 800,000
Multiplied by: % of completion 960/3,200
Recognized Gross Profit (Loss) to date 240,000
Less: Gross Profit (Loss) in prior year 0
Recognized Gross Profit (Loss) in current year 240,000
8. P102,000
20x5
Contract price 850,000
Costs incurred each year 238,000
Add: Cost incurred in prior years 0
Costs incurred to date 238,000
Add: Estimated cost to complete 357,000
Total estimated costs 595,000
Estimated Gross Profit (loss) 255,000
Multiplied by: % of completion 238/595
Recognized Gross Profit (Loss) to date 102,000
Less: Gross Profit (Loss) in prior year 0
Recognized Gross Profit (Loss) in current year 102,000
9. P990,000
20x5 20x6
Contract price 3,000,000 3,000,000
Costs incurred each year 990,000
Add: Cost incurred in prior years 450,000
Costs incurred to date* 450,000 1,440,000
Add: Estimated cost to complete
Total estimated costs 2,250,000 2,400,000
Estimated Gross Profit (loss) 750,000 600,000
Multiplied by: % of completion 20% 60%
Recognized Gross Profit (Loss) to date 150,000 360,000
Less: Gross Profit (Loss) in prior year 0 150.000
Recognized Gross Profit (Loss) in current year 150,000 210,000
10. P50,000
20x5
Contract price 1,500,000
Costs incurred each year 465,000
Add: Cost incurred in prior years 0
Costs incurred to date 465,000
Add: Estimated cost to complete 1,085,000
Total estimated costs 1,550,000
Estimated Gross Profit (loss) ( 50,000)
Multiplied by: % of completion 100%
Recognized Gross Profit (Loss) to date ( 50,000)
Less: Gross Profit (Loss) in prior year 0
Recognized Gross Profit (Loss) in current year ( 50,000)
11. P625,000
20x5 20x6
Contract price 3,500,000 3,500,000
Costs incurred each year 1,350,000 1,525,000
Add: Cost incurred in prior years -0- 1,350,000
Costs incurred to date 1,350,000 2,875,000
Add: Estimated cost to complete 1,350,000 0
Total estimated costs 2,700,000 2,875,000
Estimated Gross Profit (loss) 800,000 625,000
Multiplied by: % of completion - 100%
Recognized Gross Profit (Loss) to date 625,000
Less: Gross Profit (Loss) in prior year -0- 0
Recognized Gross Profit (Loss) in current year -0- 625,000
12. P550
Costs Incurred………………………………………………………………………. 400
Contract price………………………………………. P2,750
Cost incurred each year………………………….. P 400
Add: Cost incurred in prior year…………………. -0-
Costs incurred to date…………………………….. P 400
Add: Estimated costs to complete……………… _1,600
Total estimated costs………………………………. P2,000
Estimated gross profit (loss)………….……………. P 750
Multiplied by: percentage of completion……….. 400/2,000 150
Construction In Progress account – inventory account…………………… 550
13. P1,200,000
The term “completed” should be “cost recovery”
Costs Incurred 700,000
Contract price………………………………………. P2,000,000
Cost incurred each year………………………….. P 700,000
Add: Cost incurred in prior year…………………. -0-
Costs incurred to date…………………………….. P 700,000
Add: Estimated costs to complete……………… 800,000
Total estimated costs………………………………. P1,500,000
Estimated gross profit (loss)………….……………. P 500,000
Multiplied by: percentage of completion……….. 0 0
Construction In Progress account – inventory account 700,000
20x5
Costs incurred 600,000
Contract price………………………………………. P2,000,000
Cost incurred each year………………………….. P 600,000
Add: Cost incurred in prior year…………………. _700,000
Costs incurred to date…………………………….. P1,300,000)
Add: Estimated costs to complete……………… 800,000
Total estimated costs………………………………. P(2,100,000)
Estimated gross profit (loss)………….……………. P (100,000)
Multiplied by: percentage of completion……….. 0 _(100,000)
Construction In Progress account – inventory account 1,200,000
20x5
Costs Incurred 238,000
Contract price………………………………………. P850,000
Cost incurred each year………………………….. P238,000
Add: Cost incurred in prior year…………………. -0-
Costs incurred to date…………………………….. P238,000
Add: Estimated costs to complete……………… _357,000
Total estimated costs………………………………. P595,000
Estimated gross profit (loss)………….……………. P255,000
Multiplied by: percentage of completion……….. _238/595 102,000
Construction In Progress account – inventory account 340,000
20x6
Costs incurred 319,600
Contract price………………………………………. P850,000
Cost incurred each year………………………….. P319,600
Add: Cost incurred in prior year…………………. _238,000
Costs incurred to date…………………………….. P557,600
Add: Estimated costs to complete……………… _139,400
Total estimated costs………………………………. P697,000
Estimated gross profit (loss)………….……………. P153,000
Multiplied by: percentage of completion……….. _557.6/697 _122,400
Construction In Progress account – inventory account 782,000
Less: Progress billings (P260,000 + P210,000) 470,000
Construction In Progress account (net) – Due
from customers 312,000
16. P312,000
17. same with no.16 – P312,000
18. (P9,000,000 – P8,250,000) (P3,795,000 ÷ P8,250,000) = P345,000.
19.P3,795,000 + P345,000 = P4,140,000.
20. P2,750,000
P1,650,000
————— × P5,000,000 =
P2,750,000 P3,000,000
23. P875,000
Revenue P5,000,000
Costs 3,025,000
Total gross profit 1,975,000
Recognized in (1,100,000)
20x5 Recognized P 875,000
in 20x6
Or P5,000,000
Total revenue (2,750,000)
Recognized in
20x5
Recognized in 20x6 2,250,000
Costs in 20x6 (1,375,000)
Gross profit in 20x6 P 875,000
Percentage-of-Completion Completed-Contract
Gross Profit Gross Profit
24. 20x5 P750,000a 20x5 —
25. 20x6 P210,000b 20x6 —
26. 20x7 P440,000c 20x7 P1,400,000d
aP1,500,000
bP2,640,000
27. P312,500
Revenue = [P250,000/(P250,000 + P750,000)]
P1,250,000
= P312,500
Gross profit = P312,500 P250,000 = P62,500
Construction in progress = P250,000 + P62,500 = P312,500
28. P125,000
(2) Current Assets
Inventorie
s Construction in progress* P1,000,000
Less: Partial billings** (875,000)
Costs and recognized profit P 125,000
not yet billed
*Revenue to date = (P250,000 +
P600,000)/(P250,000 + P600,000 +
P212,500) 1,250,000 = P1,000,000
Construction in progress = P250,000
+ P600,000 + P150,000 =
P1,000,000
**Partial billings = P375,000 + P500,000
= P875,000
29.
P60,00
THEORIES
Revenue to date P1,250,000
Revenue from previous periods _1,000,000
Revenue for 20x7 P 250,000
Costs incurred in 20x7 _ 190,000
Gross profit for 20x7 P 60,000
1. False 6. False 11. False 16. True 21. True 26. True 31. False
2. True 7. False 12. True 17. False 22. False 27. True 32. False
3. True 8. False 13. False 18. True 23. False 28. False 33. True
4. False 9. True 14. True 19. False 24. False 29. False 34. False
5. False 10, False 15, False 20. True 25. False 30. True 35. True
36. False
37. True
38. True
39. False
40. False