Question

Testbank Problem 140 Blue Construction, Inc. experienced the following construction activity in 2021, the first year of operations. Cash Total Billings Collections Costs Estimated Contract Through Through incurred Through Additional Costs to Contract Price 12/31/21 12/31/21 12/31/21 Complete X $270,000 $180,000 $165,000 $202,000 $ 73,000 Y 340,000 125,000 125,000 120,000 262.000 z 243,000 243,000 218.000 178,000 5853.000 $548,000 $508,000 $500,000 $335.000 Each of the above contracts is with a different customer, and any work remaining at December 31, 2021 is expected to be completed in 2022. Prepare a partial income statement to indicate how the above contract information would be reported. Blue uses the completed-contract method. Blue Construction, Inc. Partial Income Statement For the Year 2021 Prepare a partial balance sheet to indicate how the above contract information would be reported. Blue uses the completed-contract method. (List Current Assets in order of liquidity.) Blue Construction, Inc. Partial Balance Sheet As of 12/31/18 Click if you would like to Show Work for this question: Open Show Work

Answer 1

Required statements:

B с 1 2 3 А Blue Construction, Inc. Partial Income Statement For the Year 2021 4 Revenue from long-term contracts (contract Z) 5 Cost of construction (contract Z) 6 Gross profit 7 Provision for loss (contract Y) (working note) $243,000 $178,000 $65,000 -$42.000 8 $120,000 $262.000 $382.000 $340,000 -$42.000 9 Working note: 10 Calculation of provision for loss: 11 Contract costs through 12/31/21 12 Estimated costs to complete 13 Total estimated costs 14 Total contract price 15 Loss recognized in 2021 16 17 Blue Construction, Inc. 18 Partial Balance Sheet 19 As of 12/31/21 20 Current assets: 21 Accounts receivable 22 Inventories 23 Construction in process (contract X) 24 Less: Billings 25 Unbilled contract costs 26 Current liabilities: 27 Billings (125,000) in excess of contract costs ($120.000) 28 Estimated liability from long-term contracts $40,000 S202.000 $180.000 $22.000 $5,000 $42,000

Formula table:

А B с 1 N 3 Blue Construction, Inc. Partial Income Statement For the Year 2021 4 Revenue from long-term contracts (contract Z) 5 Cost of construction (contract Z) 6 Gross profit 7 Provision for loss (contract Y) (working note) 243000 178000 =C4-C5 =B15 8 120000 262000 =B11+B12 340000 =B14-B13 9 Working note: 10 Calculation of provision for loss: 11 Contract costs through 12/31/21 12 Estimated costs to complete 13 Total estimated costs 14 Total contract price 15 Loss recognized in 2021 16 17 Blue Construction, Inc. 18 Partial Balance Sheet 19 As of 12/31/21 20 Current assets: 21 Accounts receivable 22 Inventories 23 Construction in process (contract X) 24 Less: Billings 25 Unbilled contract costs 26 Current liabilities: 27 Billings (125,000) in excess of contract costs ($120,000) 28 Estimated liability from long-term contracts =548000-508000 202000 180000 =B23-B24 =125000-120000 =-C7