Question

Wildhorse Construction Company had a contract starting April 2021, to construct a $24900000 building that is expected to be completed in September 2023, at an estimated cost of $22900000. At the end of 2021, the costs to date were $12595000 and the estimated total costs to complete had not changed. The progress billings during 2015 were $3,600,000 and the cash collected during 2015 was $2,400,000.
At December 31,2015 Cooper would report construction in process in the amount of:_______?

Answer 1

Answer:

The construction in process amount reported at December 2021 is $13,695,000

Explanation:

In this question, we are asked to state the amount the company will report construction in the process of.

Firstly, we calculate the profit = Total contract price - Expected costs of contract = $24,900,000-$22,900,000 = $2,000,000

The profit in percentage of cost is; 2,000,000/22,900,000 = 8.73%

The costs incurred in 2021 is $12,595,000

The proportionate profit = 12,595,000 * 8.73 = $1,100,000

The construction in process at December 2021 = Cost incurred + Proportionate profit = 12,595,000 + 1,100,000 = $13,695,000