Accounting Exercises

4. In 2011, KP Building Inc. began work on a four-year construction project (called “Cincy
One”). The contract price is $300 million. KP uses the percentage-of-completion
method of accounting. At the end of 2011, the following financial statement information
indicates the results to date for Cincy One:

INCOME STATEMENT
Gross Profit (before-taxes) recognized in 2011                                                  $22 million
BALANCE SHEET
Accounts Receivable from construction billings                                                 $10 million
Construction in progress                                             $66 million
Less: Billings on construction                                     ($75 million)
Net billings in excess of construction in progress                                              $9 million

Required: Compute the following, placing your answer in the spaces provided and
showing supporting computations:
Items to compute:
Cash collected by KP on Cincy One during 2011
Actual costs incurred by KP on Cincy One during 2011
At 12/31/2011, the estimated remaining costs to complete Cincy One
The percentage of Cincy One that was completed during 2011

 
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