ACCT Exam review
ACCT 340 – Fall 2013
Exam 2 Review Problems: Chapters 5,7,8,9
Chapter 5:
1. On February 1, 2007, Nance Contractors agreed to construct a building at a contract price of $6,000,000. Nance estimated total construction costs would be $4,000,000 and the project would be finished in 2009. Information relating to the costs and billings for this contract is as follows: 2007 2008 2009
Costs incurred in current year $1,500,000 $1,140,000 $1,960,000
Estimated costs to complete 2,500,000 1,760,000 -0-
Customer billings to date 2,200,000 4,000,000 5,600,000
Collections during the current year 2,000,000 1,500,000 2,000,000
Required:
(a) Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and for completed-contract accounting, show the gross profit that should be recorded for 2007, 2008 & 2009. Percentage-of-Completion Completed-Contract Gross Profit Gross Profit 2007 2007 2008 2008 2009 2009
(b) Prepare all necessary journals entries for 2007, 2008 & 2009 for both methods.
(c) Prepare a partial balance sheet to show how the contract would be reported using the percentage of completion method.
(d) Prepare a partial balance sheet to show how the contract would be reported using the completed contract method.
2. Carter Construction Company had a contract starting April 2008, to construct a $15,000,000 building that is expected to be completed in September 2009, at an estimated cost of $13,750,000. At the end of 2008, the costs to date were $6,325,000 and the estimated total costs to complete had not changed. The progress billings during 2008 were $3,000,000 and the cash collected during 2008 was $2,000,000. Carter uses the percentage-of-completion method.
Required:
(a) For the year ended December 31, 2008, Carter would recognize gross profit on the building of: _____
(b) At December 31, 2008, Carter would report Construction in Process in the
Exam 2 Review Problems: Chapters 5,7,8,9
Chapter 5:
1. On February 1, 2007, Nance Contractors agreed to construct a building at a contract price of $6,000,000. Nance estimated total construction costs would be $4,000,000 and the project would be finished in 2009. Information relating to the costs and billings for this contract is as follows: 2007 2008 2009
Costs incurred in current year $1,500,000 $1,140,000 $1,960,000
Estimated costs to complete 2,500,000 1,760,000 -0-
Customer billings to date 2,200,000 4,000,000 5,600,000
Collections during the current year 2,000,000 1,500,000 2,000,000
Required:
(a) Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and for completed-contract accounting, show the gross profit that should be recorded for 2007, 2008 & 2009. Percentage-of-Completion Completed-Contract Gross Profit Gross Profit 2007 2007 2008 2008 2009 2009
(b) Prepare all necessary journals entries for 2007, 2008 & 2009 for both methods.
(c) Prepare a partial balance sheet to show how the contract would be reported using the percentage of completion method.
(d) Prepare a partial balance sheet to show how the contract would be reported using the completed contract method.
2. Carter Construction Company had a contract starting April 2008, to construct a $15,000,000 building that is expected to be completed in September 2009, at an estimated cost of $13,750,000. At the end of 2008, the costs to date were $6,325,000 and the estimated total costs to complete had not changed. The progress billings during 2008 were $3,000,000 and the cash collected during 2008 was $2,000,000. Carter uses the percentage-of-completion method.
Required:
(a) For the year ended December 31, 2008, Carter would recognize gross profit on the building of: _____
(b) At December 31, 2008, Carter would report Construction in Process in the