Chapter 8

Problem V
Item to compute Answer
Total revenue recognized during 2009 (w): P50 million
CIP contains cost + gross profit = revenue, so w = P50 P 15 million
Gross profit recognized during 2009 (x): P50 – P35 = P15
Billings on construction (y) : P14 + P 46 = P60 P60million
Net billings in excess of construction in progress (z): Billings of P60 – CIP of P50 P10 million
Calculate the percentage of PAC that was completed during 2009:
50/150 = 33.33% 333.33%

Problem VI
Item to compute Answer
Cash collected by KP on Cincy One during 2009. (P75 billings – P10 A/R) P65 million
Actual costs incurred by KP on Cincy One during 2009 (P66 CIP – P22 gross pofit) P44 million
At 12/31/2009, the estimated remaining costs to complete Cincy One P156 million
(44/{44 + x})(300 – {44 + x}) = 22; x = 156
The percentage of Cincy One that wa completed during 2009 100 x (44/ {44 + 156}) 22%
 
Problem VII
1.
Progress billings on construction contract P562,000
Less accounts receivable 150,500
Cash collected in 20x4 P411,500

2.
Gross profit from construction contract + Construction in progress = Revenue for 20x4
P301,000 + P602,000 = P903,000
P903,000/P7,525,000 = 12% Percentage completed in 20x4
P301,000/.12 = P2,508,333 Estimated income on construction contract