MITCH T.

MINGLANA
BSA 301

PROBLEM 4: Compute for the gross profit on the project for 2020 and 2021

ANSWER AND SOLUTION:

2020 2021
Contract price (P3, 120, 000 x 120%) P 3,744,000 P3, 744, 000
Less: Total estimated costs:
Costs incurred each year P 546,000 P998, 400
Add: Costs incurred in prior years 0 546, 000
Costs incurred to date P546,000 P1, 544, 400
Add: Estimated costs to complete 2,054,000 1,315, 600
Total Estimated Costs P2,600,000 P2, 860, 000

Estimated gross profit P 1,144,000 P884, 000

Multiplied by: percentage of completion 21% 54%____
Recognized gross profit to date ₱ 240,240 P477, 360
Less: Recognized gross profit in prior year 0 240,240
Recognized gross profit each year P 240,240 P237,120

PROBLEM 5: Compute for the realized franchise revenue to be reported by Irene in its
Income statement as of December 31, 2020

ANSWER AND SOLUTION:

Cost of franchise revenue P300,000

Deferred franchise revenue P 250,000

Realized franchise revenue P 50,000