ACC 421Intermediate Financial Accounting I Axia College of University of Phoenix (UoP) Intermediate Accounting Weygandt, Kieso, Warfield Week Three (Week 3) Exercise 18-5 (E18-5) (Analysis of Percentage-of-Completion Financial Statements) 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 receivableconstruction 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 Instructions (a) How much cash was collected in 2007 on this contract? (b) What was the initial estimated total income before tax on this contract?
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