Banks Construction Company was contracted to build an office block on a Fixed- fee basis for $ 3,200,000. Construction began in September 20X4 and was scheduled to be completed in May 20X6. Banks has a 31 December year- end. Data related to the contract are summarized below:

1. Prepare the journal entries to record work on this contract. Use costs ( in thousands) incurred to date divided by total estimated construction costs to measure percent-age- of- completion. Round all percentages to the nearest whole number.
2. Prepare presentation of this contract on the statement of Financial position and SCI for each of the three years.
3. Assume instead that in 20X5, Banks and the client agree to change orders that increase the total revenue from $ 3,200 to $ 3,600. For each of the three years, how would this change affect (a) the amounts shown on Banks’ SCI and (b) the carrying value ofinventory?

  • CreatedFebruary 17, 2015
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