On March 1 2017 Blossom Construction Company contracted to c

On March 1, 2017, Blossom Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,350,000. The building was completed by October 31, 2019. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2017, 2018, and 2019 are giver below: 2017 2018 2019 Contract costs incurred during the year $2,944,000 $2,020,000 $2,336,000 Estimated costs to complete the contract at3,456,000 2,336,000 - 12/31 Billings to Fabrik during the year 3,200,000 3,510,000 1,640,000 (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.) (If answer is o, please enter 0. Do not leave any fields blank.) 2017 2018

Solution

Percentage completion method 2017 2018 2019 Cost incurred in till previous year 0 2944000 4964000 ADD Cost incurred during the year 2944000 2020000 2336000 Total cost incurred till date 2944000 4964000 7300000 ADD Estimated cost to be incurred 3456000 2336000 0 Total estimated cost to be incurred 6400000 7300000 7300000 Percentage of completion (A) 46.00% 68.00% 100% (cost incurred till date /total estimated cost ) Total revenue (B) 8350000 8350000 8350000 Total revenue recognized (A *B) 3841000 5678000 8350000 Less Revenue recognized in previous year 0 3841000 5678000 revenue recognized in current year 3841000 1837000 2672000 2017 2018 2019 Revenue 3841000 1837000 2672000 Less Cost incurred 2944000 2020000 2336000 Gross profit 897000 -183000 336000 Completed contracts 2017 2018 2019 Revenue 0 0 8350000 Less Cost incurred 0 0 7300000 Gross profit 0 0 1050000