Pinetree Builders has the following data for its Rolling Hil

Pinetree Builders has the following data for its Rolling Hills Construction Project. The contract price of the project is $18,000,000. Complete the following table with the required information using the percentage of completion method.

2016

2017

2018

Costs incurred to date

$4,500,000

$10,500,000

$15,500,000

Estimated costs to complete

10,500,000

2,625,000

Billings during the year

6,600,000

8,400,000

3,000,000

Cash collections during the year

6,000,000

6,000,000

6,000,000

Estimated total costs

Estimated total profit

Percentage of Completion

Revenue Recognized in each year

Profit recognized in each year

Current Asset

Current Liabilities

Required

1.         Enter the appropriate amounts in the shaded cells above.

2.         Prepare the required journal entries for 2016, 2017 and 2018.

Date

Accounts Title and Explanation

Ref.

Debit

Credit

	2016	2017	2018
Costs incurred to date	$4,500,000	$10,500,000	$15,500,000
Estimated costs to complete	10,500,000	2,625,000
Billings during the year	6,600,000	8,400,000	3,000,000
Cash collections during the year	6,000,000	6,000,000	6,000,000
Estimated total costs
Estimated total profit
Percentage of Completion
Revenue Recognized in each year
Profit recognized in each year
Current Asset
Current Liabilities

Solution

2016 2017 2018 a Costs incurred to date $4,500,000 $10,500,000 $15,500,000 b Estimated costs to complete 10,500,000 2,625,000 0 c Billings during the year 6,600,000 8,400,000 3,000,000 d Cash collections during the year 6,000,000 6,000,000 6,000,000 e=a+b Estimated total costs $15,000,000 (4500000+10500000) $13,125,000 (10500000+2625000) $15,500,000 (15500000+0) f=Total contract revenue-e Estimated total profit $3,000,000 (18000000-15000000) $4,875,000 (18000000-13125000) $2,500,000 (18000000-15500000) g=a/e*100 Percentage of Completion 30% (4500000/15000000)*100 80% (10500000/13125000)*100 100% (15500000/15500000)*100 h=total contract revenue*% increase in completion Revenue Recognized in each year 5400000 (18000000*30%) 9000000 (18000000*(80%-30%)) 3600000 (18000000*(100%-80%)) i=(f*g)-profit recognised till date Profit recognized in each year $900,000 (3000000*30%)-0 $3,000,000 (4875000*80%)-900000 ($1,400,000) (2500000*100%)-(900000+3000000) j=refer working note Current Asset 6,600,000 15,000,000 18,000,000 k=a Current Liabilities $5,700,000 $11,100,000 $15,500,000 Current assets Cash 6,000,000 12,000,000 (6000000+6000000) 18,000,000 (6000000+12000000) (opening trade receivable+Billing done during the year-cash collection during the year) Trade Receivable 600,000 (0+6600000-6000000) 3,000,000 (600000+8400000-6000000) 0 (3000000+3000000-6000000) (Revenue recognised till date-billing done till date) Amount due from customer 6,600,000 15,000,000 18,000,000 Total Current liability (billing done till date-revenue recognisedtill date) Amount due to customer 1,200,000 $600,000 0 (18000000-18000000) k=a Trade payable $4,500,000 $10,500,000 $15,500,000 5,700,000 $11,100,000 15500000 Year1 1 Construction in Progress $4,500,000 Trade Payable $4,500,000 2 Accounts Receiavble 6,600,000 Billing on construction Contract 6,600,000 3 Cash 6,000,000 Trade Receivable 6,000,000 4 Construction in progress $900,000 Construction Expense $4,500,000 Construction Revenue 5400000 5 Billing on construction Contract 1,200,000 Amount due to customer 1,200,000 Year2 1 Construction in Progress $6,000,000 (10500000-4500000) cost incurred during year Trade Payable $6,000,000 2 Accounts Receiavble 8,400,000 Billing on construction Contract 8,400,000 3 Cash 6,000,000 Trade Receivable 6,000,000 4 Construction in progress $3,000,000 Construction Expense 6,000,000 Construction Revenue 9000000 5 Billing on construction Contract 600,000 Amount due to customer 600,000 Year3 1 Construction in Progress $15,500,000 Trade Payable $15,500,000 2 Accounts Receiavble 3,000,000 Billing on construction Contract 3,000,000 3 Cash 6,000,000 Trade Receivable 6,000,000 4 Construction Expense $5,000,000 Construction Revenue 3600000 Construction in progress $1,400,000