Question

Cooper Construction Company had a contract starting April 2018, to construct a $24,000,000 building that is expected to be completed in September 2020, at an estimated cost of $22,000,000. At the end of 2018, the costs to date were $10,120,000 and the estimated total costs to complete had not changed. The progress billings during 2018 were $4,800,000 and the cash collected during 2018 was 3,200,000. Cooper uses the percentage-of-completion method. At December 31, 2018 Cooper would report Construction in Process in the amount of:

a. $ 920,000

b. $10,120,000

c. $11,040,000

d. $ 9,440,000

Answer 1

$11,040,000

Step-by-step explanation:

The computation of the amount reported in the construction in process is shown below:

But before that first we have to find out the percentage which is

Percentage = Cost incurred ÷ Total estimated cost

= $10,120,000 ÷ $22,000,000

= 46%

Now

Construction in progress = Total Revenue × percentage

= $24,000,000 × 46%

= $11,040,000

We simply applied the above formula