Construction Accounting
Jana Crebs is a contractor for the construction of large office buildings. At the beginning of 2008, three buildings were in progress. The following data describe the status of these buildings at the beginning of the year:
|
|
|
Costs Incurred to |
Estimated Cost to |
|
|
Contract Price |
Jan 1, 2008 |
Complete as of Jan 1, 2008 |
|
Building 1 |
$ 4,000,000 |
$2,070,000 |
$1,380,000 |
|
Building 2 |
9,000,000 |
6,318,000 |
1,782,000 |
|
Building 3 |
13,150,000 |
3,000,000 |
9,000,000 |
During 2008, the following costs were incurred.
Building 1 $930,000 (estimated cost to complete as of December 31, 2008, $750,000)
Building 2 $1,800,000 (job completed)
Building 3 $7,400,000 (estimated cost to complete as of December 31, 2008,$2,800,000)
Building 4 $800,000 (contract price,$2,500,000;estimated cost to complete as of December
31, 2008, $1,200,000)
Instructions:
1. Compute the total revenue, costs, and gross profit in 2008. Assume that Crebs uses the cost to cost percentage of completion method. (Round to two decimal places for percentage completed.)
2. Compute the gross profit for 2008 if Crebs uses the completed contract method.