Question

Catalina Construction Corporation signed a contract to build an apartment building for $ 5,600,000. The customer controls the building throughout the contract period. Construction began in October 20X4 and was scheduled to be completed in May 20X6. Catalina has a 31 December year- end. Data for the First two years of the contract were as follows:


Late in 20X5, the client made some design changes to the apartment layouts in the upper loors. After negotiations, Catalina agreed to a contract amendment that increased the total price to $ 6,400,000 and delayed the completion date until 31 October 20X6. Catalina estimated that the contract change would increase total costs by $ 600,000 (not included in the $ 900,000 “costs to complete” for 20X5 above). Actual costs incurred during 20X6 were $ 1,650,000. The full remaining contract price was billed during 20X6. By the end of 20X6, the client had paid the full contract price except for the 10% holdback permitted by law for 90 days.

Required:
Prepare the journal entries for Catalina. Use costs incurred to date divided by total estimated construction costs to measure percentage complete. Round your estimate of revenue to the nearestthousand.


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  • CreatedFebruary 17, 2015
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