Shumpert, Inc., entered into a contract that was to take two years to complete, with an estimated cost of $900,000. The contract price was $1,300,000. Costs of the contract for 2018, the first year, totaled $675,000.

a. What was the gross profit reported by the percentage of completion method for 2016?

b. After the contract was completed at the end of 2017 at a total cost of $950,000, what was the gross profit reported by the percentage of completion method for 2017?

Question

Marcelo Bright

Business

17 July, 04:00

Shumpert, Inc., entered into a contract that was to take two years to complete, with an estimated cost of $900,000. The contract price was $1,300,000. Costs of the contract for 2018, the first year, totaled $675,000.

a. What was the gross profit reported by the percentage of completion method for 2016?

b. After the contract was completed at the end of 2017 at a total cost of $950,000, what was the gross profit reported by the percentage of completion method for 2017?

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Answers (1)

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Boston Miranda · Answer 1

Answer for Part A and Part B is as follows:

Particulars 2016 year 2017 year

Contract Price $13,00,000 $13,00,000

Cost that has been incurred $675000 $950000

Estimated cost to complete $225000 $0

TOTAL COST $900000 $950000

Expected Gross profit $400000 $350000

Percentage that is completed 75 percent 100percent

Gross profit to be recognised $300000 $50000

Note: Calculations have been made according to the data and figures given in the question.