Long-term contract; revenue recognition over time; solve for unknowns
Response to the following problem:
In 2016, Long Construction Corporation began construction work under a three-year contract. The contract price is $1,600,000. Long recognizes revenue over time according to percentage of completion for financial reporting purposes. The financial statement presentation relating to this contract at December 31, 2016, is as follows:
Balance Sheet
Accounts receivable (from construction progress billings) $30,000
Construction in progress $100,000
Less: Billings on construction contract (94,000) 6,000
Cost and profit of uncompleted contracts to excess of billings
Income Statement
Income (before tax) on the contract recognized in 2016 $20,000
Required:
1. What was the cost of construction actually incurred in 2016?
2. How much cash was collected in 2016 on this contract?
3. What was the estimated cost to complete as of the end of 2016?
4. What was the estimated percentage of completion used to calculate revenue in 2016?