Question

B12 fx D E F А Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,300,000 The project began in 2021 and was completed in 2022. Data relating to the contract are summarized below: 2021 $324,000 $1,296,000 $410,000 $310,000 2022 $1,800,000 SO $1,680,000 $1,780,000 2021 2022 1 2 3 Costs incurred during the year 4 Estimated cost to complete as of 12/31 5 Billings during the year 6 Cash collections during the year 7 Requirement 1: Complete the income statement excerpts below assuming that revenue on the contract qualifies for recognition over time. Enter a value of 0 8 where appropriate 9 10 11 12 Construction revenues 13 Cost of construction 14 Gross profit on construction jobs 15 16 Requirement 2: Complete the balance sheet excerpts below assuming that the revenue on the contract qualifies for recognition over time. Enter a value of 0 17 where appropriate 18 19 20 Current assets: 21 Accounts receivable 22 Costs and profits in excess of billings 23 24 Current liabilities 25 Billings in excess of costs and profit 26 Requirement 3: Complete the income statement excerpts below assuming that revenue on the contract does NOT qualify for revenue recognition over time. 27 Enter a value of 0 where appropriate. 28 29 12/31/21

Answer 1

Q				2021	2022
	Cost incurred during the year	324,000	1,800,000
	Estimated Cost to complete as at year end	1,296,000	0
	Billings during the year	410,000	1,680,000
	Cash Collections during the year	310,000	1,780,000
	Total Contract Value	2,300,000	2,300,000
	Total Cost		324,000	2,124,000
	Total Cost Expected		1,620,000	2,124,000
	Percent Completed		20.00%	100.00%
	Balance Completed			80.00%
1	Income Statement
	Construction Revenue	460,000	1,840,000
	Cost of Construction	324,000	1,800,000
	Gross Profit on Construction Jobs	136,000	40,000
2	Balance Sheet Excerpts	12/31/2021
	Current Assets
	Accounts Receivable	100,000
	Cost & Profit in excess of Billlings
	Current Liabilities
	Billlings in excess of Cost & Profit	86,000
3	Income Statement		2021	2022
	Construction Revenue	0	2,300,000
	Cost of Construction	0	2,124,000
	Gross Profit on Construction Jobs	0	176,000
4	Balance Sheet Excerpts	12/31/2021
	Current Assets
	Accounts Receivable	100,000
	Cost & Profit in excess of Billlings
	Current Liabilities
	Billlings in excess of Cost & Profit	86,000