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Accounting Cost-to-Cost Completion

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Problem 1
Kingston company reported the following net income amounts:
2002 $52,000
2003 $38,000
2004 $66,000

In 2005, the company discovered errors that been made in computing the ending inventories for 2002
and 2003, as follows:
2002 ending inventory understated by $4,000
2003 ending inventory understated by $8,000

Compute the correct net incomes for (1) 2002, and (2) 2003, and (3) 2004.

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Solution Summary

This solution shows step-by-step calculations to determine the correct net incomes for 2002, 2003 and 2004 using actual cost, estimated costs, billings on contracts, and collections on contract.

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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