Burtie is in the process of constructing a number of assets for its customers, the details of which can be found below. Contract 1: Contract 1 has a price of $8 million and is 40% complete. Contract 1 is estimated to have total costs of $5 million, of which Burtie has spent $2 million to date. Burtie has received $1.5 million from the customer to date. Contract 2: Contract 2 has a price of $7 million and is 60% complete. Due to rising raw material costs, contract 2 now has estimated total costs of $9 million. Contract 3: Contract 3 has a price of $6 million but only began 1 month ago so its progress cannot be measured. Burtie has incurred costs to date of $100,000 out of total estimated costs of $4 million, and is expected to take three years to complete the contract. Required: (a) Determine the correct amount to be recorded in current assets in relation to contract 1? (8 Marks) (b) Determine the correct amount to be recorded in cost of sales in relation to contract 2? (6 Marks) (c) Determine the correct amount to be recorded in revenue in relation to contract 3? (2 Marks)
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Carson M.
Anchor Company manufactures several different styles of jewelry cases. Management estimates that during the third quarter of 20x6 the company will be operating at 80 percent of normal capacity. Because the company desires a higher utilization of plant capacity, the company will consider a special order. Anchor has received special a special order inquiry. The special order was submitted by the JCP Co. for 7,500 jewelry cases at $7.50 per case. These jewelry cases would be marketed under the JCP label and have to be shipped by October 1, 20x6. However, the JCP jewelry case is different from any jewelry case in the Anchor line. The estimated per unit costs of this case are as follows: Raw materials $3.25 Direct labor .5 hrs. @ $6.00 $3.00 Overhead .55 machine hrs. @ $4.00 $2.20 In addition, Anchor will incur $2,000 in additional set-up costs and will have to purchase a $2,500 special device to manufacture these cases; this device will be discarded once the special order is completed. The Anchor manufacturing capabilities are limited to the total machine hours available. The plant capacity under normal operations is 90,000 machine hours per year or 7,500 machine hours per month. The budgeted fixed overhead for 20x6 amounts to $216,000. All manufacturing overhead costs are applied to production on the basis of machine hours at $4.00 per hour. Anchor will have the entire third quarter to work on the special order. Management does not expect any repeat sales to be generated from the special order. Company practice precludes Anchor from subcontracting any portion of an order when special orders are not expected to generate repeat sales. REQUIRED: Answer the following: ( Unless all supporting schedules and computations for every answer are presented in good traceable order, there will be NO credit (A) 1. __________________The available capacity in machine hours that Anchor will have for the third quarter, 20x6. Show all calculations for credit. 2. _______________The required machine hours required to take the JCP Co. order. Show all calculations for credit. 3. $ ____________________ Present the amount that profit would increase or (decrease) if the JCP Co.order is accepted. Show all calculations and schedule(s) for credit.
Akash M.
Six months ago, a client with a carpentry business purchased various types of timber in bulk and expensed them. The business is part way through completing multiple projects and has calculated that $1,200 of materials have been used. This cost should be split evenly over three jobs and rebilled to the customer. What should you do to ensure that the costs are captured correctly and that your client can invoice for the expenses for each job? Create a Journal Entry to credit cost of sales, followed by three further lines where the debits are adjusted to cost of sales but associated with the jobs and marked as billable Create a zero-dollar expense. On the first line, enter a positive value of $1,200, followed by three positive expense lines of $400 associated with the customers and marked as billable Create a zero-dollar expense. On the first line, enter a positive value of $1,200, followed by three negative expense lines of $400 associated with the relevant customers and flagged as billable Create a zero-dollar expense. On the first line, enter a negative value of $1,200, followed by three positive expense lines of $400, each associated to a customer and marked as billable
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