JUSTINE R.

CARIQUITAN ACCTNG 318/FS-6:30-8:00PM

A.
Gross Profits 2021 2022 2023

Total contract price 9,000,000 9,000,000 9,000,000

A. Cost incurred to date 2,760,000 6,300,000 6,800,000

Estimated costs to complete 4,140,000 700,000

B. Estimated total contract costs 6,900,000 7,000,000 6,800,000

Expected gross profit

Multiply by % completion a/b 2,100,000 2,000,000 2,200,000

40% 90% 100%

Gross Profit earned to date 840,000 1,800,000 2,200,000

Less: Gross profit in years 840,000 1,800,000

Gross Profit for the year 840,000 960,000 400,000

Computation for cost incurred to date:

2021: 2,760,000

2022: 2,760,000 + 3,540,000 = 6,300,000

2023: 6,300,000 + 500,000 = 6,800,000

B. Provide the journal entries

2021

Traditional Accounting PFRS 15

To record cost incurred

Construction in progress 2,760,000 Contract costs 2,760,000

Cash 2,760,000 Cash 2,760,000

# #
To record billings

Accounts Receivable 4,500,000 Receivable 4,500,000

Progress billings 4,500,000 Contract liability 4,500,000

# #

To record collection

Cash (4.5mx 90%) 4,050,000 Cash 4,050,000

Accounts Receivable 4,050,000 Receivable 4,050,000

# #

To recognize revenue

Cost of construction 2,760,000 Contract liability 3,600,000

Construction in progress 840,000 Revenue 3,600,000

Revenue 3,600,000 #

# Cost of construction 2,760,000

Contract costs 2,760,000

2022

Traditional Accounting PFRS 15

To record cost incurred

Construction in progress 3,540,000 Contract costs 3,540,000

Cash 3,540,000 Cash 3,540,000

# #

To record billings

Accounts Receivable 2,700,000 Receivable 2,700,000

Progress billings(9Mx30%) 2,700,000 Contract liability 2,700,000

# #

To record collection

Cash (2.7mx9 0%) 2,430,000 Cash 2,430,000

Accounts Receivable 2,430,000 Receivable 2,430,000

# #
To recognize revenue

Cost of construction 3,540,000 Contract liability 4,500,000

Construction in progress 960,000 Revenue 4,500,000

Revenue 4,500,000 #

# Cost of construction 3,540,000

Contract costs 3,540,000

2023

Traditional Accounting PFRS 15

To record cost incurred

Construction in progress 500,000 Contract costs 500,000

Cash 500,000 Cash 500,000

# #

To record billings

Accounts Receivable 1,800,000 Receivable 1,800,000

Progress billings(9Mx20%) 1,800,000 Contract liability 1,800,000

# #

To record collection

Cash 2,520,000 Cash 2,520,000

Accounts Receivable 2,520,000 Receivable 2,520,000

# #

To recognize revenue

Cost of construction 500,000 Contract liability 900,000

Construction in progress 400,000 Revenue 900,000

Revenue 900,000 #

# Cost of construction 500,000

Contract costs 500,000

#
To eliminate the accounts

Progress billing 9,000,000

Construction progress 9,000,000

Traditional Accounting PFRS 15

Year-end adjusting entities :(2022) Contract asset 900,00

Contract liability 900,000

C. Determined the amounts presented in the financial statements

Traditional Accounting

ABC Co.

Statement of Financial position

2021 2022 2023

Current Assets

Accounts Receivable 450,000 720,000 -

Constitution in progress - 8,100,000 -

Less: Progress billings - 7,200,000 -

Gross amount due from customer - 900,000 -

Total 450,000 1,620,000 -

Current Liabilities

Construction in progress 3,600,000 - -

Less: Progress billings 4,500,000 - -

Gross amount due to customer 900,000 - -

Total 900,000 - -
PFRS15

ABC Co.

Statement of Financial Position

2021 2022 2023

Current Assets

Receivable 450,000 720,000 -

Contract asset - 900,000 -

Total 450,000 1,620,000

Current Liabilities

Current Liability 900,000 - -

Total 900,000 - -

TRADITIONAL ACCOUNTING

ABC Co.

Statement of profit or loss

2021 2022 2023

Revenue 3,600,000 4,500,000 900,000

Cost of construction (2,760,000) (1,540,000) (500,000)

Gross Profits 840,000 940,000 400,000

PFRS 15

ABC Co.

Statement of profit or loss

2021 2022 2023

Revenue 3,600,000 4,500,000 900,000

Cost of construction (2,760,000) (1,540,000) (500,000)

Gross Profits 840,000 940,000 400,00