Forman company has contracted to build a dam over a period

Question

Long-Term Construction Contracts:

Forman Company has contracted to build a dam over a period of 4 years for $3,000,000. Information relating to the performance of the contract is summarized as follows:

1. a. Compute the profit or loss for each year of the contract under the percentage-of-completion method. Enter losses as a negative number.

2013	2014	2015	2016
$	$	$	$

b. Compute the profit or loss for each year of the contract under the completed-contract method. Enter losses as a negative number.

2013	2014	2015	2016
$	$	$	$

2. a. Prepare the relevant sections of the income statement for each year under the percentage-of-completion method.

	2013	2014	2015	2016
Construct Revenue	$	$	$	$
Construction Expense
Gross Profit (loss)

Prepare the relevant sections of the ending balance sheet for 2013 under the percentage-of-completion method.

Balance Sheet	Partial	12/31/13
Current Assets	XXXXXXX	XXXXXXXX
Accounts Receivable	XXXXXXXX	$
Inventory	XXXXXXXX	XXXXXXXX
Construction in progress	$	XXXXXXXX
Less:Partial Billings	$	XXXXXXXX
Costs and recognized profit not yet billed	XXXXXXXX	$

Prepare the relevant sections of the ending balance sheet for 2014 under the percentage-of-completion method.

Balance Sheet	Partial	12/31/13
Current Assets	XXXXXXXX	XXXXXXXX
Accounts Receivable	XXXXXXXX	$
Inventory	XXXXXXXX	XXXXXXXX
Construction in progress	$	XXXXXXXX
Less:Partial Billings	$	XXXXXXXX
Costs and recognized profit not yet billed	XXXXXXXX	$

Prepare the relevant sections of the ending balance sheet for 2015 under the percentage-of-completion method.

Balance Sheet	Partial	12/31/13
Current Assets	XXXXXXXXXXXX	XXXXXXXXXX
Accounts Receivable	XXXXXXXXXX	$
Inventory	XXXXXXXXXXX	XXXXXXXXXX
Construction in progress	$	XXXXXXXXXX
Less:Partial Billings	$	XXXXXXXXXX
Costs and recognized profit not yet billed	XXXXXXXXXXX	$

b. Prepare the relevant sections of the income statement for each year under the completed-contract method. Enter losses as a negative number.

Income Statement (Partial) Years 2013 through 2016

2013	2014	2015	2016
$

Prepare the relevant sections of the ending balance sheet for 2013 under the completed-contract method.

Current Assets	XXXXXXXXXX	XXXXXXXXX
Accounts Receivable	XXXXXXXXXX	$
Inventory	XXXXXXXXXXXXX	XXXXXXXXXX
Construction in progress	$	XXXXXXXXX
Less:Partial Billings	$	XXXXXXXXXXX
Excess of Costs over related billings	XXXXXXXXXX	$

Prepare the relevant sections of the ending balance sheet for 2014 under the completed-contract method.

Current Assets	XXXXXXXXXXXX	XXXXXXXXXX
Accounts Receivable	XXXXXXXXXXX	$
Inventory	XXXXXXXXXXX	XXXXXXXXXXX
Construction in progress	$	XXXXXXXXXX
Less:Partial Billings	$	XXXXXXXXXX
Excess of Costs over related billings	XXXXXXXXXXXXX	$

Prepare the relevant sections of the ending balance sheet for 2015 under the completed-contract method.

Current Assets
Accounts Receivable		$
Inventory
Construction in progress	$
Less:Partial Billings	$
Excess of Costs over related billings		$