This paper circulates around the core theme of Hutton Construction specializes in the construction of commercial and industrial buildings. The contractor is experienced in bidding long-term construction projects of this type, with the typical project lasting fifteen to twenty-four months. The contract together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Hutton Construction specializes in the construction of commercial and
industrial buildings. The contractor is experienced in bidding
long-term construction projects of this type, with the typical project
lasting fifteen to twenty-four months. The contractor uses the
percentage-of-completion method of revenue recognition since, given the
characteristics of the contractor’s business and contracts, it is the
most appropriate method. Progress toward completion is measured on a
cost to cost basis. Hutton began work on a lump-sum contract at the
beginning of 2014. As bid, the statistics were as follows:
Lump-sum price (contract price) $4,000,000
Estimated costs
Labor $ 850,000
Materials and subcontractor 1,750,000
Indirect costs 400,000 3,000,000
$1,000,000
At the end of the first year, the following was the status of the contract:
Billings to date $2,230,000
Costs incurred to date
Labor $ 464,000
Materials and subcontractor 1,098,000
Indirect costs 193,000 1,755,000
Latest forecast total cost 3,000,000
It should be noted that included in the above costs incurred to date
were standard electrical and mechanical materials stored on the job
site, but not yet installed, costing $105,000. These costs should not be
considered in the costs incurred to date.
(a) Compute the percentage of completion on the contract at the end of 2014.
(b) Indicate the amount of gross profit that would be reported on this contract at the end of 2014.
(c) Make the journal entry to record the income (loss) for 2014 on Hutton’s books.
4. Computation of selected ratios.
The following data is given:
December 31,
2013 2012
Cash $ 66,000 $ 50,000
Accounts receivable (net) 68,000 60,000
Inventories 90,000 110,000
Plant assets (net) 383,000 325,000
Accounts payable 57,000 40,000
Salaries and wages payable 10,000 5,000
Bonds payable 70,000 70,000
10% Preferred stock, $40 par 100,000 100,000
Common stock, $10 par 120,000 90,000
Paid-in capital 80,000 65,000
Retained earnings 170,000 175,000
Net credit sales 800,000
Cost of goods sold 600,000
Net income 80,000
Instructions
Compute the following ratios:
(a) Acid-test ratio at 12/31/13
(b) Receivables turnover in 2013
(c) Inventory turnover in 2013
(d) Profit margin on sales in 2013
(e) Rate of return on common stock equity in 2013
