Lily Network Consultants, Incorporated uses the percentage-of-completion method to account for its long-term contracts. It uses...

Transcribed Image Text:

Lily Network Consultants, Incorporated uses the percentage-of-completion method to account for its long-term contracts. It uses the cost-to-cost approach to measure progress. During the current year, Lily signed a contract to develop a computer network for an international accounting firm. Information related to the contract is presented below. (Click the icon to view the contract information.) Read the requirements. Requirement a. Compute the percentage-of-completion for each year. (Round the percentages to the nearest hundredth percent, X.XX%.) 2022 2023 2024 Cumulative percent complete $ 640,000 Contract price 2022 2023 2024 Actual construction costs incurred during the year $ 185,600 $ 262,400 $ 90,000 185,600 448,000 Construction costs incurred in prior years Cumulative construction costs incurred to date 185,600 448,000 538,000 Estimated costs to complete 394,400 192,000 Estimated total costs 580,000 640,000 538,000 Progress billings made during the year 290,000 320,000 30,000 Cash collections during the year 230,000 310,000 100,000 a. Compute the percentage-of-completion for each year. b. Compute the gross profit and revenue to be recognized each year of the contract. Prepare the journal entries required for each year of the contract. d. Prepare thet-accounts for construction in progress, billings on construction in progress, and accounts receivable. с. Determine the net asset (liability) for each year of the contract on December 31. ve е. Lily Network Consultants, Incorporated uses the percentage-of-completion method to account for its long-term contracts. It uses the cost-to-cost approach to measure progress. During the current year, Lily signed a contract to develop a computer network for an international accounting firm. Information related to the contract is presented below. (Click the icon to view the contract information.) Read the requirements. Requirement a. Compute the percentage-of-completion for each year. (Round the percentages to the nearest hundredth percent, X.XX%.) 2022 2023 2024 Cumulative percent complete $ 640,000 Contract price 2022 2023 2024 Actual construction costs incurred during the year $ 185,600 $ 262,400 $ 90,000 185,600 448,000 Construction costs incurred in prior years Cumulative construction costs incurred to date 185,600 448,000 538,000 Estimated costs to complete 394,400 192,000 Estimated total costs 580,000 640,000 538,000 Progress billings made during the year 290,000 320,000 30,000 Cash collections during the year 230,000 310,000 100,000 a. Compute the percentage-of-completion for each year. b. Compute the gross profit and revenue to be recognized each year of the contract. Prepare the journal entries required for each year of the contract. d. Prepare thet-accounts for construction in progress, billings on construction in progress, and accounts receivable. с. Determine the net asset (liability) for each year of the contract on December 31. ve е.

Answer rating: 100% (QA)

Percentage Completion formula for Calculating completion cost incurred Estimated Total cost FOR THE YEAR 201516 PERCENTAGE COMPLETION COST INCURRED ES... View the full answer