Apartment Contract by ncs14743


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Place the proper account title in the cell where the word "Account title" appears on the template.

Place the value in the cell where the word "Value" or "Amount" appears on the template. A formula may be placed
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Write a formula into cells where the word "Formula" appears. In these cells, an amount calculated can be
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Place the explanation for the entry in the cell where the word "Text Explanation" appears on the template.

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                                  Instructions, Page 1 of 3, 12/15/2010, 1:50 PM
Consider using "Split" panes to assist in copy and paste of data.

Much of the exercises and problems can have data entered by the "look to" or "=A34" type formula where cell
A34 contains the data to be entered. This precludes typing and data entry errors.

                                 Instructions, Page 2 of 3, 12/15/2010, 1:50 PM
Problem:         P18-3, Recognition of Profit and Entries on Long-term Contract
On March 1, 2010, Chance Company entered into a contract to build an apartment building. It is estimated that the building will
cost               $2,000,000             and will take 3 years to complete. The contract price was      $3,000,000 The
information that follows pertains to the construction period:

                                                   2010             2011           2012
                             Costs to date:       $600,000       $1,560,000     $2,100,000
               Estimated costs to complete:      1,400,000          520,000              0
                    Progress billing to date:    1,050,000        2,000,000      3,000,000
                    Cash collected to date:        950,000        1,950,000      2,850,000

(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.

Gross profit recognized in:

                                                             2010                            2011                     2012
Contract price                                                       Amount                         Amount                        Amount
   Costs to date                                       Amount                      Amount                       Amount
   Estimated costs to complete                         Amount       Formula        Amount           Formula                       Formula
Total estimated profit                                              Formula                         Formula                       Formula
Percentage completed to date                                        Formula                         Formula                       Formula
Total gross profit recognized                                       Formula                         Formula                       Formula
Less: GP recognized in previous years                               Amount                          Formula                       Formula
Gross profit recognized in current year                             Formula                         Formula                       Formula

(b) Prepare all necessary journal entries for 2012.

                 Account Title                                                                      Amount
                    Account Title                                                                               Amount

                 Accounts Receivable                                                                Amount
                    Account Title                                                                               Amount

                 Account Title                                                                      Amount
                    Account Title                                                                               Amount

                 Account Title                                                                      Amount
                 Account Title                                                                      Amount
                    Account Title                                                                               Amount

                 Account Title                                                                      Amount
                    Account Title                                                                               Amount

(c) Prepare a partial balance sheet for December 31, 2011, showing the balances in the receivables and inventory accounts.

                                                       CHANCE COMPANY
                                                      Balance Sheet (Partial)
                                                        December 31, 2011
                 Current assets:
                 Accounts receivable                                                                Amount
                 Account title                                                     Amount
                 Less: Billings                                                    Amount
                 Costs and recognized gross profit in excess of billings                            Formula

                                                                                                                     Problem 18-3, Page 3 of 3, 12/15/2010, 1:50 PM

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