Explore BrainMass

Explore BrainMass

    Analysis of Percentage-of-Completion Financial Statements Question

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    In 2007, Beth Botsford Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Beth Botsford uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2007, follow.

    Balance Sheet
    Accounts receivable?construction contract billings $21,500
    Construction in progress $65,000
    Less: Contract billings 61,500
    Cost of uncompleted contract in excess of billings 3,500
    Income Statement
    Income (before tax) on the contract recognized in 2007 $18,200

    (a) How much cash was collected in 2007 on this contract?
    (b) What was the initial estimated total income before tax on this contract?

    © BrainMass Inc. brainmass.com March 4, 2021, 9:25 pm ad1c9bdddf

    Solution Preview

    a) Contract billings to date $61,500
    Less: Accounts receivable 12/31/07 ...

    Solution Summary

    The solution analyzes the percentage of completion financial statement. How much cash was collected in 2007 on this contract was determined.