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Percentage of Completion Entries

SMDC Construction Company received a three-year contract to build a building for $7 million. In 2019, costs incurred were $1.5 million with estimated costs to complete of $3.5 million. Billings were $1.2 million and collections $1 million. In 2020, costs incurred were $2.42 million with estimated costs to complete of $1.68 million. Billings were $2.6 million and collections $2.7 million. In 2021, costs incurred were $1.68 million with no estimated costs remaining. Billings were $3.2 million and collections $3.3 million.

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DJ ULRICH
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155 views5 pages

Percentage of Completion Entries

SMDC Construction Company received a three-year contract to build a building for $7 million. In 2019, costs incurred were $1.5 million with estimated costs to complete of $3.5 million. Billings were $1.2 million and collections $1 million. In 2020, costs incurred were $2.42 million with estimated costs to complete of $1.68 million. Billings were $2.6 million and collections $2.7 million. In 2021, costs incurred were $1.68 million with no estimated costs remaining. Billings were $3.2 million and collections $3.3 million.

Uploaded by

DJ ULRICH
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Long Term Construction Contracts

% of CITD % of CIP
completion = TEC completion = CP
Problem 1

SMDC Construction receives a contract to build a building over a period of 3 years for a price of
P7,000,000. Information relating to the performance of the contract is summarized as follows:

2019 2020 2021


Construction cost incurred during the year 1,500,000 2,420,000 1,680,000
Estimated costs to complete 3,500,000 1,680,000 -
Billings during the year 1,200,000 2,600,000 3,200,000
Collections during the year 1,000,000 2,700,000 3,300,000

Required: Prepare the entries under the percentage of completion.

AR 2,500,000
PB 2,500,000

% of CITD % of CIP
completion = TEC completion = CP

Problem 2

The Sun Construction Company signed a contract to build a dam over a period of 3 years for a price
of P20,000,000. Information relating to the performance of the contract is summarized as follows:
2019 2020 2021
Construction costs incurred during the year 4,000,000 8,000,000 12,000,000
Estimated costs to complete 12,000,000 12,000,000 -
Billings during the year 3,000,000 7,000,000 10,000,000
Collections during the year 2,600,000 7,200,000 10,200,000

Required: Prepare the entries under the percentage of completion.

CIP = Cost Incurred to date Profit/(LOSS)

8,000,000 12,000,000 (4,000,000)


2014 2015 2016
CP 7,000,000 7,000,000 7,000,000
% 30% 70% 100%
CRTD 2,100,000 4,900,000 7,000,000
CITD 1,500,000 3,920,000 5,600,000
CP/L TD 600,000 980,000 1,400,000
CP/L PY - (600,000) (980,000)
CP/L CY 600,000 380,000 420,000
Under CRM - - 1,400,000
2014 2015

CIP 1,500,000 CIP 2,420,000


VA 1,500,000 VA 2,420,000

AR 1,200,000 AR 2,600,000
PB 1,200,000 PB 2,600,000

Cash 1,000,000 Cash 2,700,000


AR 1,000,000 AR 2,700,000

Cost 1,500,000 Cost 2,420,000


CIP 600,000 CIP 380,000
CR 2,100,000 CR 2,800,000

2014 2015 2016


CP 20,000,000 20,000,000 20,000,000
% 25%
CRTD 5,000,000
CITD 4,000,000
CP/L TD 1,000,000 (4,000,000) (4,000,000)
CP/L PY - (1,000,000) 4,000,000
CP/L CY 1,000,000 (5,000,000) -
CRM - (4,000,000) -
2014 2015

CIP 4,000,000 CIP 8,000,000


VA 4,000,000 VA 8,000,000

AR 3,000,000 AR 7,000,000
PB 3,000,000 PB 7,000,000

Cash 2,600,000 Cash 7,200,000


AR 2,600,000 AR 7,200,000

Cost 4,000,000 Cost 8,000,000


CIP 1,000,000 CIP 5,000,000
CR 5,000,000 CR 3,000,000
2016

CIP 1,680,000
VA 1,680,000

AR 3,200,000
PB 3,200,000

Cash 3,300,000
AR 3,300,000

Cost 1,680,000
CIP 420,000
CR 2,100,000

PB 7,000,000
CIP 7,000,000

2016

CIP 12,000,000
VA 12,000,000

AR 10,000,000
PB 10,000,000

Cash 10,200,000
AR 10,200,000

Cost 12,000,000
CIP
CR 12,000,000

PB 20,000,000
CIP 20,000,000

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