Interest on mortgage payable 30,000

Notes payable 100,000

Interest payable 10,000

Capital stock 400,000

Retained earnings (deficit) (200,000)

TOTAL 1,000,000company is in financial and its stockholders and creditors have requested difficulty and
its

stockholders have requested a statement of affairs for planning purposes. The following information

is available:

1. The company estimates that 126,000 is the maximum amount of collectible for the accounts

receivable.

2. Except for 20% of the inventory items that are damaged and worth only 4,000 the cost of

other items is expected to be recovered in full.

3. The appraised value of the machinery is 40,000

4. Wages payable andand taxes payable are unsecured priority liabilities.

5. The land and building have a combined appraisal value of 340,000 and are subject to the

300,000 mortgage and related accrued interest.

REQUIRED:

1. Prepare a Statement of Affairs for Evergreen Company as of June 30, 2021.

2. Compute the estimated settlement per peso ofLahar Construction Corporation contracted with the
City of Pampanga to construct a dam at a

price of 16,000,000. Lahar expects to earn 1,520,000 on the contract. The percentage of completion

method is to be used and the completion stage is to be determined by estimates made by the

engineer. The summary of the data for 2018,2019, and 2020: YEAR COST

INCURRED

ESTIMATED

COST TO
COMPLETE0

ENGINEER’S

ESTIMATE OF

COMPLETION

BILLINGS ON

CONTRACTS

COLLECTIONS

ON BILLINGS

2018 4,600,000 9,640,000 31% 5,000,000 4,500,000

2019 4,500,000 5,100,000 58% 6,000,000 5,400,000

2020 5,250,000 0 100% 5,000,000 6,100,000Prepare a schedule showing the revenue, cost and gross
profit earned each year using the

percentage of completion method, using the engineer’s estimate as a measure of

completion.

2. Prepare all journal entries required to reflect the contract

3. Prepare journal entries for 2020 assuming zero profit methodConstruction began operations on
January 1, 2020. During the year, the company entered

into a contract with DHE Company to construct a manufacturing facility. At that time, the Ramos

estimated that it will take 5 years to complete the facility at a total cost of 4,800,000. The total

contract price for the facility is 5,800,000.

During the year, Ramos incurred 1,250,000 in construction costs related to the project. Due to price

adjustments on materials, estimated total costand paid 30% of the contract price.

REQUIRED:

Prepare the schedules to compute the gross profit recognized for December 31, 2020 and the

amount of cost of uncompleted contract in excess of billings at the year end under zero profit

approach and percentage of completion method.