Construction Company Financial Statement Summary

SAMPLE CONSTRUCTION COMPANY
FINANCIAL STATEMENT AND

SUPPLENTARY INFORMANTION
For the Year Ended
December 31, 2011
The financial statement, prepared by an independent Certified
Public Accountant, is essential for bonding purposes. It should
answer all of the surety’s questions regarding the financial
health of the company, as well as disclose contingencies,
guarantees, and other items that may not be reflected on the
various statements. If the surety knows the CPA understands the
construction industry, the financial statement will enhance the
contractor’s bonding line due to the increased reliability of
the information presented. The following is a financial
statement prepared to maximize both bonding and banking lines.
TABLE OF CONTENTS
PAGES
Independent Accountant's Review Report on the Financial

Statements (The Representation of Management)..................1
Financial Statements
Balance Sheet................................................2
Statement of Operations and Retained Earnings................3
Statement of Cash Flows....................................4-5
Notes to the Financial Statements.........................6-16
Supplementary Data
Schedule 1-Summary of Construction Operations...............17
Schedule 2-Schedule of Completed Contracts..................18
Schedule 3-Schedule of Contracts in Process.................19
Schedule 4-Schedule of Revenues Earned......................20
Schedule 5-General and Administrative Expenses..............21

INDEPENDENT ACCOUNTANT’S REVIEW REPORT
The Shareholder and Board of Directors

of Sample Construction Company
Phoenix, Arizona
I have reviewed the accompanying balance sheet of Sample Construction

Company as of December 31, 2011 and the related statements of operations
and retained earnings and cash flows for the year then ended. A review
includes primarily applying analytical procedures to management’s
financial data and making inquiries of management. A review is
substantially less in scope than an audit, the objective of which is the
expression of an opinion regarding the financial statements as a whole.
Accordingly, I do not express such an opinion.
Management is responsible for the preparation and fair presentation of

the financial statements in accordance with accounting principles
generally accepted in the United States of America and for designing,
implementing, and maintaining internal control relevant to the
preparation and fair presentation of the financial statements.
My responsibility is to conduct the review in accordance with Statements

on Standards for Accounting and Review Services issued by the American
Institute of Certified Public Accountants. Those standards require me
to perform procedures to obtain limited assurance that there are no
material modifications that should be made to the financial statements.
I believe that the results of my procedures provide a reasonable basis
for my report.
Based on my review, I am not aware of any material modifications that

should be made to the accompanying financial statements in order for
them to be in conformity with generally accepted accounting principles
generally accepted in the United States of America.
My review was made for the purpose of expressing a conclusion that there
are no material modifications that should be made to the financial
statements in order for them to be in conformity with accounting
principles generally accepted in the United States of America. The
information included in the accompanying Schedules 1 through 5 is
presented only for purposes of additional analysis and has been
subjected to the inquiry and analytical procedures applied in the review
of the basic financial statements, and I am not aware of any material
modifications that should be made to such data.
THESE FINANCIAL STATEMENTS HAVE BEEN PREPARED ONLY FOR EDUCATIONAL

PURPOSES!!!
March 10, 2012
-1-
BALANCE SHEET
(See Independent Accountant's Review Report)
December 31, 2011
ASSETS
Current assets (Note 1)

Cash and cash equivalents (Notes 1 and 2) $ 385,000
Contracts receivable (Notes 1, 2 and 3) 1,540,000
Costs and estimated earnings in excess
of billings on uncompleted contracts
(Notes 1 and 4) 15,000
Salary advances due from employees 4,000
Note receivable, shareholder (Note 7) 5,000
Prepaid items 31,000
Total current assets $ 1,980,000
Property and equipment, net of accumulated

depreciation and amortization (Notes 1 and 5) $ 250,000
Other assets
Note receivable, shareholder (Note 7) $ 57,000
Total assets $ 2,287,000
The Notes to the Financial Statements are an integral part of this

Statement.
LIABILITIES
Current liabilities (Note 1)

Accounts payable, including retention of
$45,000 $ 450,000
Billings in excess of costs and estimated
earnings on uncompleted contracts
(Notes 1 and 4) 150,000
Current portion of long-term debt (Note 9) 75,000
Accrued liabilities
Insurance payable 40,000
Bonuses and payroll taxes payable 90,000
Sales tax payable 35,000
Deferred income taxes payable (Notes 1 and 8) 87,000
Total current liabilities $ 927,000
Long-term debt (Note 9)

Note payable $ 300,000
Less current portion above -75,000
Total long-term debt $ 225,000
Deferred income taxes (Notes 1 and 8) $ 25,000
Total liabilities $ 1,177,000
Commitments (Note 6) $ -
STOCKHOLDER’S EQUITY
Capital stock
Authorized 1,000,000 shares of common stock,
no par value, 9,804 shares issued, 4,804
shares outstanding $ 50,000
Additional paid-in capital 110,000
Retained earnings 950,000
Total stockholder’s equity $ 1,110,000
Total liabilities and stockholder's equity $ 2,287,000
-2-
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(See Independent Accountant’s Review Report)
For the Year Ended December 31, 2011
Contract revenues earned (Note 1) $ 11,000,000
Cost of revenues earned (Note 1) -9,300,000
Gross profit $ 1,700,000
General and administrative expenses (Note 1) -1,099,000
Income (-loss) from operations $ 601,000
Other income (-expense)

Interest income $ 20,000
Miscellaneous income 2,000
Interest expense -15,000
Total other income (-expense) $ 7,000
Net income (-loss) before (-provision) recovery

Income before income taxes $ 608,000
Provision for income taxes (Notes 1 and 8) -240,000
Net income (-loss) $ 368,000
Retained earnings, beginning of year 582,000
Retained earnings, end of year $ 950,000

statement.
-3-
STATEMENT OF CASH FLOWS
Cash flows provided by operating

activities
Cash received from customers $ 10,300,000
Cash paid to suppliers and
employees -10,068,000
Interest received 20,000
Miscellaneous income 2,000
Interest paid -15,000
Net cash provided by operating

activities $ 239,000
Cash flows used by investing

activities
Capital expenditures $ -93,000
Net cash used by investing

activities -93,000
Cash flows used by financing

activities
Principal payments on
long-term debt $ -80,000
Proceeds from note receivable 4,000
Net cash used by financing

activities -76,000
Net increase in cash and cash

equivalents $ 70,000
Cash and cash equivalents,

beginning of period 315,000
Cash and cash equivalents,

end of period $ 385,000

statement.
-4-
STATEMENT OF CASH FLOWS (CONTINUED)
Reconciliation of Net Income to Net Cash

Provided by operating activities
Net income (-loss) $ 368,000

Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation $ 65,000
Change in assets and liabilities
Increase in contracts receivable -90,000
Decrease in costs and estimated
earnings in excess of billings
on uncompleted contracts 20,000
Increase in prepaid items -13,000
Increase in employee advances -1,000
Decrease in accounts payable -235,000
Increase in billings in excess of
costs and estimated earnings on
on uncompleted contracts 70,000
Decrease in bonuses and payroll
taxes payable -15,000
Increase in sales tax payable 11,000
Decrease in insurance payable -3,000
Increase in deferred income
taxes payable 62,000
Total adjustments -129,000
Net cash provided by operating

activities $ 239,000

statement.
-5-
NOTES TO THE FINANCIAL STATEMENTS
Company formation and operating cycle.
Sample Construction Company is a corporation duly organized and

operating under the laws of the State of Arizona. The Corporation was
approved by the State of Arizona on March 6, 2008.
The length of the Company's contracts vary but is typically less than
one year. Therefore, assets and liabilities are classified as current
and non-current based on a one year operating cycle.
1. SIGNIFICANT ACCOUNTING POLICIES
Revenue and cost recognition. The accompanying financial statements are

prepared according to the percentage of completion method, and therefore
take into account the profit earned to date on contracts not yet
completed.
The amount considered as earned under this method is that portion of the
total contract price the contractor has a right to bill, based on that
portion of the contract work actually completed. It is not related to
the progress billings to customers. Completion percentage is measured
by the relationship of cost expended to anticipated final total cost,
based on current estimates of cost to complete the project.
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect
insurance, miscellaneous expenses and depreciation costs. Provisions
for estimated losses on uncompleted contracts are made in the period in
which such losses are determined. Changes in job performance, job
conditions, and estimated profitability, including those arising from
contract penalty provisions, and final contract settlements may result
in revisions to costs and income and are recognized in the period in
which the revisions are determined.
The asset, "Costs and estimated earnings in excess of billings on

uncompleted contracts," represents revenues recognized in excess of
amounts billed. The liability, "Billings in excess of costs and
estimated earnings on uncompleted contracts," represents billings in
excess of revenues recognized.
Arizona, its counties and most of its cities impose a sales tax on the
Company’s sales when Sample Construction Company is acting in the
capacity of a prime contractor. The Company collects the sales tax from
its customers and remits the taxes to the applicable taxing authority.
The Company’s accounting policy is to include the sales tax collected
and remitted in both revenue and cost of revenues earned. For the year
December 31, 2011, the sales tax collected and reflected in cost of
revenues earned is $390,000.
-6-
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Contract receivables. Contracts receivable represent the amounts billed

but uncollected on completed construction contracts and construction
contracts in process.
The Company uses the allowance method of recognizing uncollectible

accounts receivable. The allowance method recognizes bad debt expense
as a percentage of accounts receivable based on a review of the
individual accounts outstanding and the Company's prior history of
uncollectible accounts receivable. There was no change in the allowance
from the prior year. At December 31, 2011, there is no allowance for
bad debt established and in the opinion of management, all outstanding
receivables at December 31, 2011 are considered fully collectible.
There not any change in the valuation allowance from the prior year.
Property, equipment, and depreciation. Property and equipment are

recorded at cost. Maintenance and repairs are charged to operations
when incurred. Betterments and renewals are capitalized when incurred.
Depreciation for all major classes of depreciable assets is provided for
primarily on the straight-line method, taken over the useful lives of
the assets.
Income taxes. The Company is taxed for federal and state purposes under
the provisions of Subchapter C of the Internal Revenue Code.
For financial accounting purposes the Company reports income and

expenses based on the percentage-of-completion method of accounting for
long-term construction contracts. For tax accounting purposes the
Company reports income and expenses based on the completed contract
method of accounting for long-term construction contracts.
The Company recognizes deferred income taxes according to the provisions

of FASB Accounting Standards Codification 740-10-45-4 and 45-5. FASB
ASC 740 utilizes the liability method and deferred taxes are determined
based on the estimated future tax effects of differences between the
financial statement and tax bases of assets and liabilities given the
provisions of enacted tax laws.
The Company accounts for tax penalties and interest in the provision for
income taxes.
The Corporation adheres to accounting rules that prescribe when to

recognize and how to measure the financial statement effects, if any, of
income tax positions taken or expected to be taken on its income tax
returns, including the position that the Corporation continues to
qualify to be treated as a C Corporation for both federal and state
-7-
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
income tax purposes. These rules require management to evaluate the

likelihood that, upon examination by relevant taxing jurisdictions,
those income tax positions would be sustained.
Based on that evaluation, if it were more than 50% probable that a

material amount of income tax would be imposed at the entity level upon
examination by the relevant taxing authorities, a liability would be
recognized in the accompanying balance sheet along with any interest and
penalties that would result from that assessment. Should any such
penalties and interest be incurred, the Corporation’s policy would be to
recognize them as operating expense.
Based on the results of management’s evaluation, adoption of the new

rules did not have a material effect on the Corporation’s financial
statements. Further, no interest or penalties have been accrued or
charged to expense as of December 31, 2011 or for the year then ended.
The Corporation’s income tax returns are subject to examination by

taxing authorities for a period of three years from the date they are
filed. As of December 31, 2011, the tax following tax years are subject
to examination:
Jurisdiction Open Years for Filed Returns Return to be filed in 2012
Federal December 31, 2008-2010 December 31, 2011

Arizona December 31, 2008-2010 December 31, 2011
General and administrative expenses. General and administrative

expenses are charged to expense as incurred.
Cash equivalents. For purposes of the statement of cash flows, the

Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Compensated absences. Compensated absences have not been accrued

because the amount cannot be reasonably estimated.
Advertising costs. Advertising costs are charged to expense when

incurred. For the year ended December 31, 2011, there is not any
advertising expense.
2. CONCENTRATION OF CREDIT RISK
Company activities
Sample Construction Company is engaged in the construction industry as a
-8-
2. CONCENTRATION OF CREDIT RISK (CONTINUED)
general contractor, primarily on commercial projects in the greater

Phoenix, Arizona area. The work is performed under fixed-price
contracts. These contracts are undertaken by the Company without joint
ventures or partnerships.
Cash and Cash Equivalents
The Company maintains noninterest bearing cash balances in two financial

institutions with various locations. The Federal Deposit Insurance
Corporation provides for unlimited insurance coverage of noninterest-
bearing accounts through December 31, 2012. The noninterest bearing
accounts are separate from, and in addition to the insurance coverage
provided to a depositor's other deposit accounts.
The Company has other deposit accounts at a financial institution with

two different locations. The Federal Deposit Insurance Corporation
insures $250,000 of deposits at each location. At December 31, 2011,
the Company has uninsured cash in the aforesaid money markets accounts
in the approximate amount of $15,000.
Effective July 31, 2010, the Dodd-Frank Wall Street Reform and Consumer
Protection Act permanently raises the current standard maximum deposit
insurance amount to $250,000.
Major customers
During the year ended December 31, 2011, Sample Construction Company
recognized sales to three major customers that exceeded 10% of total net
sales. Sales to these customers were $3,750,000 (34.1%), $3,400,000
(30.9%) $2,900,000 (26.4%) of total net sales.
Contract receivables
It is the Company's policy to pre-lien all construction work performed.

Pre-liens enable a contractor to file a lien in the event the project
owner fails to live up to the provisions of the contract.
In general, a construction contractor has a number of days, defined by

statue, in which to file a lien in the event of non-payment of a
contract receivable. The contractor then has six months to foreclose on
the property. The foreclosure forces a sheriff's sale of the aforesaid
property. The bank or mortgage holder has first rights, up to the
mortgage amount, to any proceeds of the sale. Any proceeds in excess of
the mortgage is received by the contractor.
-9-
3. CONTRACT RECEIVABLES
Contract receivables
Completed contracts $ 270,000
Contracts in process 1,000,000
Unbilled receivables 20,000
Retention 250,000
Less allowance for doubtful accounts (Note 1) -
Total contract receivable $ 1,540,000
Unbilled receivables represent completed jobs for which a final billing

had not been submitted as of December 31, 2011.
Historically, the Company's uncollectible contracts receivable, after

direct write-offs, have been negligible. In the opinion of management,
all contract receivables outstanding at December 31, 2011, are
considered to be fully collectible, therefore at December 31, 2011, no
doubtful account is established. Bad debt expense at December 31, 2011
is $20,000.
As of December 31, 2011, there is not any contract receivables aged

greater than 90 days.
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Costs incurred on uncompleted contracts $ 3,650,000

Estimated earnings 650,000
$ 4,300,000
Less: Billings to date -4,435,000
$ -135,000
Included in accompanying balance sheet

under the following captions:
Costs and estimated earnings in excess

of billings on uncompleted contracts $ 15,000
Billings in excess of costs and estimated

earnings on uncompleted contracts -150,000
$ -135,000
-10-
5. PROPERTY AND EQUIPMENT
Assets
Building and land $ 150,000
Furniture and fixtures 50,000
Vehicles 350,000
Construction equipment 150,000
$ 700,000
Accumulated depreciation and amortization

Building $ 30,000
Furniture and fixtures 40,000
Vehicles 260,000
Construction equipment 120,000
$ 450,000
Net property and equipment $ 250,000
Total depreciation expense for the year ended December 31, 2011 is
$65,000.
6. COMMITMENTS
Performance and payment bonds
The Company, as a condition for entering into certain construction

contracts, has outstanding surety bonds collateralized by contract
receivables.
7. RELATED PARTY TRANSACTIONS
Note receivable from related party
On September 3, 2003, the Company sold its building and land to the
Company’s sole shareholder. As part of the sale, the Company signed a
note receivable with it’s shareholder for $77,000. The note stipulates
principal and interest payments of $700 per month, with a balloon
payment, of approximately $20,000, due September, 2013. The note bears
interest at 7.00% per annum. The balance due at December 31, 2011 is
$62,000. At December 31, 2011, $5,000 of the receivable is reflected as
a current asset and the balance of $57,000 is recognized as a long-term
asset.
Office and land lease
-11-
7. RELATED PARTY TRANSACTIONS (CONTINUED)
The Company has a non-cancelable operating lease on the above land and
office facilities with Sample Holdings, LLC. Sample Holdings, LLC is
100% owned by the Company’s sole shareholder. The operating agreement
expires December 31, 2015. The base rent requires a monthly payment of
$4,000 including sales tax. Total rental expenses for year ended
December 31, 2011 is $48,000. The Company has an option to renew the
lease for an additional five years.
As of December 31, 2011, a schedule of future minimum lease payments

due under the non-cancelable operating lease agreements are as
follows:
Period Ending
December 31, Amount
2012 $ 48,000
2013 48,000
2014 48,000
2015 48,000
$ 192,000
There were no contingencies, minimum rentals or subleases during the

year ended December 31, 2011.
8. INCOME TAXES AND DEFERRED INCOME TAXES
For the year ended December 31, 2011 the provision of income taxes
include the following:
Current $ 178,000
Provision for deferred income taxes 62,000
$ 240,000
Deferred taxes are determined based on the estimated future tax effects
of differences between the financial statement and tax bases of assets
and liabilities given the provisions of the enacted tax laws. However,
some temporary differences cannot be identified with a particular asset
or liability, such as differences between percentage-of-completion and
completed contract methods for income recognition on long-term
contracts. As of December 31, 2011, the net deferred tax liability is
comprised of the following:
-12-
8. INCOME TAXES AND DEFERRED INCOME TAXES (CONTINUED)
Federal State Total

Current deferred taxes
Gross liabilities $ 70,000 $ 17,000 $ 87,000
Non-current deferred taxes

Gross liabilities $ 19,000 $ 6,000 $ 25,000
Total deferred taxes $ 89,000 $ 23,000 $ 112,000
The tax effect of significant temporary differences representing

deferred tax assets and liabilities are as follows:
Long-term contracts (cumulative

financial statement revenue
greater than tax basis revenue,
resulting in a current deferred
tax liability) $ 87,000
Depreciation (financial statement

net book value greater than tax
basis net book value, resulting in
a long-term deferred tax liability $ 25,000
Total deferred tax liabilities $ 112,000
For the year ended December 31, 2011, the Company's effective income tax
rate is higher than what would be expected if the federal statutory rate
were applied to income from continuing operations, primarily due to
state taxes, net of federal income tax benefit.
9. LONG-TERM DEBT
At December 31, 2011, long-term consist of the following:
Note payable to finance company, collateralized by

a vehicle, principal and interest due in monthly
installments of $1,200. The note bears interest at
5.000 percent and is due in full by July, 2012. $ 20,000
Note payable to finance company, collateralized by

equipment, principal and interest due in monthly
installments of $1,800. The note bears interest at
5.500 percent and is due in full by December, 2014. 80,000
Note payable to finance company, collateralized
-13-
9. LONG-TERM DEBT (CONTINUED)
Vehicles, principal payments due in monthly

installments of $5,000, plus interest on the
unpaid balance at the rate of 7.75% per annum,
also payable monthly. The note is due in full
February, 2014. 200,000
Total $ 300,000
Less current portion -75,000
Total long-term debt $ 225,000
A schedule of future minimum principal payments due on long-term debt

outstanding at December 31, 2011, is as follows:
Year ending December 31,

2012 $ 75,000
2013 175,000
2014 50,000
Thereafter -
$ 300,000
The Company has a $400,000 line of credit commitment from XYZ Bank.
Borrowings under the line are secured by contract receivables, property,
plant and equipment and the shareholder’s personal assets. The line
accrues interest at the bank’s prime rate plus two percent. The prime
rate at December 31, 2011 is 3.25%. There is not a balance outstanding
under the line at December 31, 2011.
The Company shall timely perform and observe the following financial
covenants:
a. A minimum tangible net worth of $600,000.
b. A maximum ratio of total liabilities to tangible net worth of 2.50

to 1.
c. A minimum debt service coverage of 1.00: 1.
10. FINANCIAL INSTRUMENTS
The Companies financial assets are contract receivables, costs and

estimated earnings in excess of billings on uncompleted contract,
employee advances, note receivable, shareholder and pre-paid items. The
-14-
10. FINANCIAL INSTRUMENTS (CONTINUED)
Company’s financial liabilities are trade payables, billings in excess

of costs and estimated earnings on uncompleted contracts accrued
liabilities and fixed rate loans. It is management’s opinion that the
Company is not exposed to significant interest rate risk or credit risk
arising from any of the aforementioned instruments (long-term assets
and debt's interest rate is fixed and reflect market rates). Unless
otherwise noted the fair values of these financial instruments are
deemed by management to approximate their carrying values.
11. STATEMENT OF CASH FLOW
Non-Cash Investing and Financing Activity
During the year ended December 31, 2011, the Company did not have any
non-cash investing and financing activities that affected assets and
liabilities:
12. ESTIMATES
The preparation of financial statements in conformity with generally

accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The amount considered earned under the percentage of completion method

on fixed price contracts is measured by the relationship of cost
expended to anticipated final total cost, based on current estimates of
cost to complete the project(s). That method is used because management
considers total cost to be the best available measure of progress on the
contracts. Because of the inherent uncertainties in estimating costs,
it is reasonably possible that the Company's recorded estimate of cost
to complete the project(s) may change in the near term.
13. BACKLOG
The following schedule shows a reconciliation of backlog representing

signed contracts in existence at December 31, 2011:
Balance, December 31, 2010 $ 1,295,000

New contracts, 2010 10,705,000
$ 12,000,000
Less current revenue earned, 2011 -11,000,000
-15-
13. BACKLOG (CONTINUED)
Balance, December 31, 2011 $ 1,000,000
In addition, between January 1, 2012 and March 10, 2012, the Company
enter into additional construction contracts in the amount of $7,800,00.
14. SUBSEQUENT EVENT CUT-OFF DATE
Management considered March 10, 2012 as the cut-off date regarding

consideration of subsequent events analysis and disclosure. The date is
the date the financial statements were available for issuance.
-16-
SCHEDULE 1-SCHEDULE OF CONSTRUCTION OPERATIONS
Revenues Cost of Gross

Earned Construction Profit
Contracts completed during the year

Total revenue, costs & gross profit $ 11,200,000 $ 9,600,000 $ 1,600,000
Reflected in prior years -3,000,000 -2,550,000 -450,000
Recognized during current year $ 8,200,000 $ 7,050,000 $ 1,150,000
Contracts in process at year end

Total revenue, costs & gross profit $ 4,300,000 $ 3,650,000 $ 650,000
Reflected in prior years -1,500,000 -1,400,000 -100,000
Recognized during current year $ 2,800,000 $ 2,250,000 $ 550,000
Totals $ 11,000,000 $ 9,300,000 $ 1,700,000
-17-
SCHEDULE 2-SCHEDULE OF COMPLETED CONTRACTS
Gross
Gross Profit Current Gross Profit
Job Adjusted Cost of Gross Profit (Loss) Profit (Loss) (Loss)
No. Job Description Contract Price Construction (Loss) In Prior Period Earned Percent
113 Chandler Office $ 1,700,000 $ 1,440,000 $ 260,000 $ 180,000 $ 80,000 15.3%

115 Central Apts. 1,800,000 1,500,000 300,000 190,000 110,000 16.7
118 Rancho Market 1,400,000 1,220,000 180,000 80,000 100,000 12.9
119 Bell Towers 2,900,000 2,480,000 420,000 - 420,000 14.5
120 Strip Center 3,400,000 2,960,000 440,000 - 440,000 12.9
$ 11,200,000 $ 9,600,000 $ 1,600,000 $ 450,000 $ 1,150,000
-18-
SCHEDULE 3-SCHEDULE OF CONTRACTS IN PROCESS
Job to Date
Gross Profit
Job Adjusted Revenues Cost of Gross Profit (Loss) in Prior
No. Job Name Contract Price Amount Billed Earned Construction (Loss) Period
121 Phoenix Office $ 1,550,000 $ 1,290,000 $ 1,305,000 $ 1,105,000 $ 200,000 $ 100,000

122 Medical Center 3,750,000 3,145,000 2,995,000 2,545,000 450,000 -
Totals $ 5,300,000 $ 4,435,000 $ 4,300,000 $ 3,650,000 $ 650,000 $ 100,000

Management Estimates
Current Gross Final Estimated

Profit (Loss) Under-Billed Percent Work Load Cost to Future Gross Gross Profit
Earned (Over-Billed) Done Remaining Complete Profit (Loss) (Loss) G.P. %
$ 100,000 $ 15,000 84.2% $ 245,000 $ 207,000 $ 38,000 $ 238,000 15.4%

450,000 (150,000) 79.9% 755,000 640,000 115,000 565,000 15.1%
15,000
$ 550,000 $ -150,000 $ 1,000,000 $ 847,000 $ 153,000 $ 803,000
-19-
SCHEDULE 4-SCHEDULE OF COST OF REVENUES EARNED
COST CATEGORY DOLLAR AMOUNT
Direct Cost:
Labor and overhead $ 400,000
Material 800,000
Subcontractors 6,800,000
Equipment rentals 100,000
Other direct cost 455,000
Total direct cost $ 8,555,000
Indirect cost:
Superintendents $ 250,000
Fringe benefits 30,000
Vehicle expense 60,000
Depreciation 25,000
Insurance 200,000
Repairs and maintenance 40,000
Travel 115,000
Small tools and supplies 25,000
Total indirect cost $ 745,000
TOTAL COST $ 9,300,000
-20-
SCHEDULE 5-SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
Amount
Advertising and promotion $ 4,100
Bad debt expense 20,000
Contributions 8,700
Common area expense 2,500
Depreciation 40,000
Dues and subscriptions 18,000
Employee goodwill 10,000
Entertainment and meals 4,900
Insurance 24,000
Licenses and taxes 5,700
Miscellaneous expense 2,600
Office expenses 36,000
Office salaries 116,000
Officer's salary 636,500
Payroll taxes 43,000
Professional fees 28,000
Rent expense 48,000
Repairs and maintenance 6,000
Telephone and utilities 19,000
Travel expense 3,000
Vehicle expense 23,000
$ 1,099,000
-21-

Construction Company Financial Statement Summary

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Construction Company Financial Statement Summary

Uploaded by

Copyright:

Available Formats

SAMPLE CONSTRUCTION COMPANY

FINANCIAL STATEMENT AND

Independent Accountant's Review Report on the Financial

Statement of Operations and Retained Earnings................3

Statement of Cash Flows....................................4-5

Notes to the Financial Statements.........................6-16

Schedule 1-Summary of Construction Operations...............17

Schedule 2-Schedule of Completed Contracts..................18

Schedule 3-Schedule of Contracts in Process.................19

Schedule 4-Schedule of Revenues Earned......................20

Schedule 5-General and Administrative Expenses..............21

The Shareholder and Board of Directors

I have reviewed the accompanying balance sheet of Sample Construction

Management is responsible for the preparation and fair presentation of

My responsibility is to conduct the review in accordance with Statements

Based on my review, I am not aware of any material modifications that

THESE FINANCIAL STATEMENTS HAVE BEEN PREPARED ONLY FOR EDUCATIONAL

March 10, 2012

Current assets (Note 1)

Total current assets $ 1,980,000

Property and equipment, net of accumulated

Total assets $ 2,287,000

The Notes to the Financial Statements are an integral part of this

Current liabilities (Note 1)

Total current liabilities $ 927,000

Long-term debt (Note 9)

Total long-term debt $ 225,000

Deferred income taxes (Notes 1 and 8) $ 25,000

Total liabilities $ 1,177,000

Total stockholder’s equity $ 1,110,000

Total liabilities and stockholder's equity $ 2,287,000

Contract revenues earned (Note 1) $ 11,000,000

Cost of revenues earned (Note 1) -9,300,000

Gross profit $ 1,700,000

General and administrative expenses (Note 1) -1,099,000

Income (-loss) from operations $ 601,000

Other income (-expense)

Total other income (-expense) $ 7,000

Net income (-loss) before (-provision) recovery

Provision for income taxes (Notes 1 and 8) -240,000

Net income (-loss) $ 368,000

Retained earnings, beginning of year 582,000

Retained earnings, end of year $ 950,000

The Notes to the Financial Statements are an integral part of this

Cash flows provided by operating

Net cash provided by operating

Cash flows used by investing

Net cash used by investing

Cash flows used by financing

Net cash used by financing

Net increase in cash and cash

Cash and cash equivalents,

Cash and cash equivalents,

The Notes to the Financial Statements are an integral part of this

Reconciliation of Net Income to Net Cash

Net income (-loss) $ 368,000

Total adjustments -129,000

Net cash provided by operating

The Notes to the Financial Statements are an integral part of this

Company formation and operating cycle.

Sample Construction Company is a corporation duly organized and

1. SIGNIFICANT ACCOUNTING POLICIES

Revenue and cost recognition. The accompanying financial statements are