Manchester Victorian construction Inco. Signed a new contract on the 10th of May, 2020. The...
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Accounting
Manchester Victorian construction Inco. Signed a new contract on the 10th of May, 2020. The contracted is assigned with a price of 8.4 million and the company expects that it will take approximately 3 to 4 years to complete the project. The following are the related cost, billing and collection over years 2020-2023:
2020
2021
2022
2023
Cost during the year
$1,100,000
$2,570,000
$3,162,000
$1,388,000
Cost to complete
$5,100,000
$3,750,000
$1,728,000
-
Billing During the year
$1,000,000
$2,000,000
$4,000,000
$1,500,000
Collection during the year
$800,000
$1,750,000
$3,000,000
$2,950,000
You are required to calculate the revenues, construction expense, accumulated cost and gross profit for each year under both methods:
Percent of completion method
2020
2021
2022
2023
Revenues
Construction expense
Gross profit or loss
Accumulated actual cost
Zero profit method
2020
2021
2022
2023
Revenues
Construction expense
Gross profit or loss
Accumulated actual cost
Answer & Explanation
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