1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Dennis_Churaev [7]
2 years ago
8

Indiana Co. began a construction project in 2021 with a contract price of $163 million to be received when the project is comple

ted in 2023. During 2021, Indiana incurred $32 million of costs and estimates an additional $86 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed. In 2022, Indiana incurred additional costs of $59 million and estimated an additional $37 million in costs to complete the project. Indiana (Do not round your percentage calculated): Multiple Choice Recognized $35.00 million gross profit on the project in 2022. Recognized $33.50 million gross profit on the project in 2022. Recognized $12.68 million gross profit on the project in 2022. Recognized $10.00 million gross profit on the project in 2022.
Business
1 answer:
iragen [17]2 years ago
8 0

Answer: Recognized $12.68 million gross profit on the project in 2022

Explanation:

Firstly we would need to ascertain the percentage of completion in 2022. We will do this by using the costs.

The cost incurred till date is,

= $32 million (incurred in 2021) + $59 million (incurred in 2022)

= $91 million. (1)

A further $37 million is estimated to remain in costs by project completion so the total cost would be,

= $91 million + 37 million

= $128 million is the total cost to be incurred. (2)

Dividing (1) by (2) to find out how much costs have been incurred vs how much is life we have,

= 91 / 128

= 0.7109

= 71 %

71 % of the project has been completed.

We will now find out the revenue for that very year using the percentage of the project completed.

The Total Revenue is $163 million so we will take 71% of that,

= 0.71(163)

= $115.73 million can be recognized as revenue TILL DATE. (3)

To find out the Revenue for the year then we can deduct the revenue of the previous year from the Revenue till date to find out the revenue for 2022.

But first we need to find the revenue of 2021 using the same method we used to calculate the Revenue this far

= 32 million / (32 + 86 million) * 163 million

= $44.01 million in revenue in 2021 (4)

Subtracting (4) from (3) to get the revenue for 2022 we have,

= 115.73 - 44.01

= $71.72 million is therefore the revenue for the year 2022

Calculating the gross profit for the year 2022 then we can subtract the cost in 2022 from the revenue for 2022.

= 71.72 million - 59 million

= $12.72 million

The answer we got is off by $0.04 from option C so we will pick Option C as the correct answer with the discrepancy going down to rounding off errors in the Intermediate Calculation.

You might be interested in
At the beginning of 2021, Brad’s Heating & Air (BHA) has a balance of $24,800 in accounts receivable. Because BHA is a priva
NISA [10]

Answer:

  • 3. Calculate bad debt expense for 2021 and 2022 under the allowance method and under the direct write-off method, prior to any adjusting entries.
  • 2021

Under the Allowance Method    

Dr Bad Debt Expense $ 5.960  

Cr Allowance for Uncollectible Accounts  $ 5.960

Under the Direct Write-Off Method    

There aren't movements of writen-off accounts.

  • 2022

In 2022, customers’ accounts totaling $6,800 are written off as uncollectible.

Under the Direct Write-Off Method    

Dr Bad Debt Expense $ 6.800    

Cr Accounts Receivable   $ 6.800  

Under the Allowance Method    

3. Calculate bad debt expense for 2022 under the allowance method  

Dr Bad Debt Expense $ 5.440  

Cr Allowance for Uncollectible Accounts  $ 5.440

Explanation:

  • Initial Balance  

Dr Accounts Receivable   $ 24.800

  • During 2021, install air conditioning systems on account  

Dr Accounts Receivable  $ 178.000  

Cr Sales  $ 178.000

  • During 2021, collect $173,000 from customers on account.    

Dr Cash $ 173.000  

Cr Accounts Receivable   $ 173.000

  • 3. At the end of 2021, estimate that uncollectible accounts total 20% of ending accounts receivable.    

Dr Bad Debt Expense $ 5.960  

Cr Allowance for Uncollectible Accounts  $ 5.960

  • FINAL Balance 2021  

Dr Accounts Receivable  $ 29.800  

Cr Allowance for Uncollectible Accounts  $ 5.960

  • 4. In 2022, customers’ accounts totaling $6,800 are written off as uncollectible. Under the Allowance Method  

Dr Allowance for Uncollectible Accounts $ 6.800  

Cr Accounts Receivable   $ 6.800

  • 4. In 2022, customers’ accounts totaling $6,800 are written off as uncollectible. Under the Direct Write-Off Method  

Dr Bad Debt Expense $ 6.800  

Cr Accounts Receivable   $ 6.800

  • Sub TOTAL Balance 2022  

Dr Accounts Receivable  $ 23.000  

Dr Allowance for Uncollectible Accounts  $ 840

  • 3. Calculate bad debt expense for 2022 under the allowance method  

Dr Bad Debt Expense $ 5.440  

Cr Allowance for Uncollectible Accounts  $ 5.440

  • FINAL Balance 2022  

Dr Accounts Receivable  $ 23.000  

Cr Allowance for Uncollectible Accounts  $ 4.600

If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % of accounts receivables as CREDIT.

Because the company has a debit balance in that account it's necessary to register an entry that compensate the DEBIT value and reflect A CREDIT estimated as % of account receivable.

Bad accounts are those credits granted by the company and there is no possibility of being charged.

When customers buy products on credits but the company cannot collect the debt, then it's necessary to cancel the unpaid invoice as uncollectible.

One way is to directly cancel bad debts at the time it was decided that the credit is bad, the total amount reported as bad debt expenses negatively affect the income statement and the accounts receivable are reduced by the same amount, less assets

The other way is to determine a percentage of the total amount of accounts receivable as bad debts, there are many ways to analyze accounts receivable and calculate the value of bad debts.

When the company has the percentage of uncollectible accounts, the required journal entry is Bad Expenses (debit) with Reserve for Bad Accounts (credit)

At the time of cancellation, since the expenses were recognized before, we only use the Allowance for Uncollectible Accounts (Debit)  with accounts receivable (credit), with this we are recognizing the bad credit of the company.

5 0
3 years ago
The underground economy refers to used product sellers who sell in secondary markets. It is thought to make up ________ of the U
hammer [34]

The underground economy refers to used product sellers who sell in secondary markets. It is thought to make up 3-30% of the US gross national product.

Explanation:

Household production refers to goods and services people produce for themselves.

Underground economy refers to buying and selling of goods and services that are concealed from the government to avoid taxes or regulations or because the goods and services are illegal.

If you know how much the economy works for a brief time, it doesn't matter.

If one knows how goods and services are produced for a decade or further, it might be more important to omit domestic production and development in the underground economy.

7 0
3 years ago
Fiona raised 2/7 of the money and Patrick raised 3/5 of the money. The rest of the money was raised by the rest of the group. Wh
Stels [109]

Answer:

31/35

Explanation:

Fiona  + Patrick = 2/7 + 3/5

\frac{10 + 21}{35}  = \frac{31}{35}

4 0
3 years ago
Read 2 more answers
The world price of a ton of steel is $1000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. On
Arte-miy333 [17]

Answer:

The correct answer is B

Explanation:

Export is the term which is defined as the goods and the services which are produced in one country and the residents of the other country purchased or bought it.

In short, it means that produced domestically, and then sold it to the foreign country.

Under this situation, the world price of the steel is $1,000. And the Russia started to export the steel so, it will lead to exporting the steel and the price would be $1,0000.

6 0
3 years ago
The ____ the proportion of the final product that suppliers provide, the _____ the impact they will have on overall product cost
almond37 [142]

The larger the proportion, the greater the impact they will have on overall product cost and quantity.

5 0
3 years ago
Other questions:
  • Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock di
    13·1 answer
  • Andrea invests $5,000 in five Epic Electronics bonds that mature in 10 years. Unexpectedly just the week after she invests, she
    5·1 answer
  • Read the following actual bill. Sawtooth National Recreation Area and Jerry Peak Wilderness Additions Act Designates specified p
    13·1 answer
  • You are considering two home security companies for your new house. The first company offers free installation and equipment, bu
    5·1 answer
  • A hotel at Lake Lanier Islands surveys guests to determine their satisfaction with the hotel service and amenities. This activit
    9·1 answer
  • On January 1, 2018, M Company granted 90,000 stock options to certain executives. The options are exercisable no sooner than Dec
    15·1 answer
  • Bella’s Beauties sells vacuums and shampooers. The vacuums have a unit selling price of $60 and unit variable costs of $20. The
    7·1 answer
  • Because they focus on the priority population, rely heavily on "consumer" input for decision making, and attempt to continually
    14·1 answer
  • Texas permits voters to decide directly on only three matters: constitutional amendments, the state income tax, and
    7·1 answer
  • Anita and Roger, two senior members of Bloncert Inc., and Wilma, their subordinate, are having a discussion about the company's
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!