Question

Cooper Construction Company had a contract starting April 2021, to construct a $24,000,000 building that is expected to be completed in September 2023, at an estimated cost of $22,000,000. At the end of 2021, the costs to date were $10,120,000 and the estimated total costs to complete had not changed. The progress billings during 2021 were $4,800,000 and the cash collected during 2021 was 3,200,000. Cooper uses the percentage-of-completion method. At December 31, 2021 Cooper would report Construction in Process in the amount of: A. $ 920,000 B. $10,120,000 C. $11,040,000 D. $ 9,440,000

Answer 1

Answer:At December 31, 2021 Cooper would report Construction in Process in the amount of: C. $11,040,000

Explanation:

Particulars                                                            Amount

Total Contract Price                                               $24,000,000

Expected Costs of Contract                                       $22,000,000

Profit ($24millon -$22millon)                                        $2,000,000

Profit in % of cost   $2,000.000/$22,000,000          9.09%

Costs incurred in 2021                                           $10,120,000

Gross  Profit = total gross profit on contract x Total % of completion in 2021 $10,120,000  x 9.09%                                                        $919,908

construction in process at 31 Dec 2021=

$10,120,000  +   $919,908=$11,039,000 rounded up to  $11,040,000