CHAPTER 7

SUGGESTED ANSWERS
Exercise 7-1 1. Contract price Cost incurred to date Est. cost to complete Total estimated cost Total estimated gross profit Percentage of completion 2010 - Recognized revenue Cost of revenue Gross profit 2011 - Recognized revenue Cost of revenue Gross profit 2012 - Recognized revenue Cost of revenue Gross profit 2. a. Construction in progress Cash, Materials, etc. 7,500,000 7,500,000 36,000,000 8,000,000 36,000,000 2010 P50,000,000 P 7,500,000 30,000,000 37,500,000 P12,500,000 20% To Date P10,000,000 7,500,000 P 2,500,000 P40,000,000 34,500,000 P 5,500,000 P50,000,000 40,800,000 P 9,200,000 2010 27,000,000 27,000,000 6,000,000 6,000,000 2011 P50,000,000 P34,500,000 8,625,000 P43,125,000 P 6,875,000 80% Recognized in prior year/s P10,000,000 7,500,000 P 2,500,000 P40,000,000 34,500,000 P 5,500,000 2011 6,300,000 6,300,000 2012 P50,000,000 P40,800,000 __________ P40,800,000 P 9,200,000 100% To be recognized this year P10,000,000 7,500,000 P 2,500,000 P30,000,000 27,000,000 P 3,000,000 P10,000,000 6,300,000 P 3,700,000 2012

b. Accounts Receivable 8,000,000 Progress Billings on Const. Contracts

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c. Cash Accounts Receivable d. Cost of LTCC Construction in Progress Revenue from LTCC e. Progress Billings on Construction Contracts Construction In Progress 3. Statement of Financial Position Current Assets: Accounts Receivable

5,500,000 5,500,000 7,500,000 2,500,000 10,000,000

33,000,000 33,000,000 27,000,000 3,000,000 30,000,000

11,500,000 11,500,000 6,300,000 3,700,000 10,000,000 50,000,000 50,000,000

P5,500,000 P44,000,000 40,000,000 2010 2011 43,000,000 32,000,000 33,000,000 33,000,000 31,000,000 31,000,000 23,000,000 2,000,000 25,000,000 45,250,000 4,750,000 50,000,000 40,000,000 40,000,000 22,250,000 2,750,000 25,000,000 45,000,000 45,000,000 29,000,000 29,000,000