Blossom Enterprises Ltd. has entered into a contract beginning in February 2020 to build two warehouses for Atlantis Structures Ltd.The contract is a non-cancellable fixed price contract for $10.0 million. The following data pertain to the construction period (allfigures in thousands).Costs for the yearEstimated costs to completeProgress billings for the year (non-refundable)Cash collected for the yearGross profit/(loss) $eTextbook and MediaList of AccountsAccount Titles and Explanation(To record cost of construction)The construction industry has experienced significant expansion, making construction materials and labour more costly thanoriginally estimated. Blossom finds it extremely difficult to estimate the costs to complete construction and therefore difficult toestimate the percent complete. It must account for the construction project using the zero-profit method.(To record progress billings)Calculate the amount of the gross profit to be recognized each year of the contract. (Do not leave any answer field blank. Enter O foramounts. Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45).)2020(To record collections)2020(To record revenues)2021(To record construction expenses)$3,8004,6004,600 1,2203,400 4.100 2,5003,100 4,1502022$1,150Prepare the journal entries for 2020 and 2021. (Use Materials, Cash, Payables for costs incurred to date.) (Credit account titles areautomatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles andenter o for the amounts.)For Year 2020:-0-2,75020212022DebitCredit

Blossom Company Discussed in Question is a Construction Company. We Understand that Construction…

2020 2021 2022 Costs for the year $3,800 4,600 1.150 Estimated costs to complete 4,600 1,220 -0- Progress billings for the year (non-refundable) 3,400 4.100 2,500 Cash collected for the year 3,100 4,150 2,750

2020 2021 2022 Costs for the year $3,800 4,600 1.150 Estimated costs to complete 4,600 1,220 -0- Progress billings for the year (non-refundable) 3,400 4.100 2,500 Cash collected for the year 3,100 4,150 2,750

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
Sandhill Enterprises Ltd. has entered into a contract beginning in February 2023 to build two warehouses for Tamarisk Structures Ltd. The contract is a non-cancellable fixed-price contract for $9.2 million. The following data pertain to the construction period (all figures in thousands). Costs for the year Estimated costs to complete Progress billings for the year (non-refundable) Cash collected for the year (a) Percent complete Save for Later 2023 2024 2025 $3,645 4,455 800 4,455 900 3,320 2,925 Using the percentage-of-completion method, calculate the percentage complete for each year of the contract. (Round answers to 0 decimal places, eg. 52%) 2023 -0. 3,880 2,000 3,930 2,345 2024 2025 Attempts: 0 of 1 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above. % (c1) The parts of this question must be completed in order. This part will be available when you complete the part above. (c2) The parts of…
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