Accounting for long-term construction contracts-Revenue Recognition-MG The board of directors of Ogle Construction Company is meeting...

  

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Accounting for long-term construction contracts-Revenue Recognition-MG The board of directors of Ogle Construction Company is meeting to choose between the cost- recovery method and the percentage-of-completion method of accounting for long-term contracts in the company's financial statements. You have been engaged to assist Ogle's controller in the preparation of a presentation to be given at the board meeting. The controller provides you with the following information: 1. Ogle commenced doing business on January 1, 2018. 2. Construction activities for the year ended December 31, 2018, were as follows: Total Contract Cash Collections Billings Through 12/31/18 Project € 340,000 210,000 475,000 ABCDE Project ABCDE Price € 500,000 720,000 475,000 200,000 450,000 €2.345.000 Contract Costs Incurred Through 12/31/18 € 424,000 195,000 350,000 123,000 320,000 €1.412.000 100,000 400,000 €1.525.000 Estimated Additional Costs to Complete Contracts €101,000 455,000 -0- 97,000 80,000 €733.000 Through 12/31/18 € 310,000 210,000 390,000 65,000 400,000 €1.375.000 3. Each contract is with a different customer. 4. Any work remaining to be done on the contracts is expected to be completed in 2019. Instructions (a) Prepare a schedule by project, computing the amount of income (or loss) before selling. general, and administrative expenses for the year ended December 31, 2018, which would be reported under: (1) The cost-recovery method. (2) The percentage-of-completion method (based on estimated costs). (b) Prepare the general journal entry(jes) to record revenue and gross profit on project B (second project) for 2018, assuming that the percentage-of-completion method is used. (c) Indicate the balances that would appear in the statement of financial position at December 31, 2018 for the following accounts for Project D (fourth project), assuming that the percentage-of-completion method is used. Accounts Receivable Billings on Construction in Process Construction in Process (d) How would the balances in the accounts discussed in part (c) change (if at all) for Project D (fourth project), if the completed-contract method is used? Accounting for long-term construction contracts-Revenue Recognition-MG The board of directors of Ogle Construction Company is meeting to choose between the cost- recovery method and the percentage-of-completion method of accounting for long-term contracts in the company's financial statements. You have been engaged to assist Ogle's controller in the preparation of a presentation to be given at the board meeting. The controller provides you with the following information: 1. Ogle commenced doing business on January 1, 2018. 2. Construction activities for the year ended December 31, 2018, were as follows: Total Contract Cash Collections Billings Through 12/31/18 Project € 340,000 210,000 475,000 ABCDE Project ABCDE Price € 500,000 720,000 475,000 200,000 450,000 €2.345.000 Contract Costs Incurred Through 12/31/18 € 424,000 195,000 350,000 123,000 320,000 €1.412.000 100,000 400,000 €1.525.000 Estimated Additional Costs to Complete Contracts €101,000 455,000 -0- 97,000 80,000 €733.000 Through 12/31/18 € 310,000 210,000 390,000 65,000 400,000 €1.375.000 3. Each contract is with a different customer. 4. Any work remaining to be done on the contracts is expected to be completed in 2019. Instructions (a) Prepare a schedule by project, computing the amount of income (or loss) before selling. general, and administrative expenses for the year ended December 31, 2018, which would be reported under: (1) The cost-recovery method. (2) The percentage-of-completion method (based on estimated costs). (b) Prepare the general journal entry(jes) to record revenue and gross profit on project B (second project) for 2018, assuming that the percentage-of-completion method is used. (c) Indicate the balances that would appear in the statement of financial position at December 31, 2018 for the following accounts for Project D (fourth project), assuming that the percentage-of-completion method is used. Accounts Receivable Billings on Construction in Process Construction in Process (d) How would the balances in the accounts discussed in part (c) change (if at all) for Project D (fourth project), if the completed-contract method is used?