Posted: July 12th, 2016

Where is revenue used?

On March 1, 2010, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by October 31, 2012. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2010, 2011, and 2012 are given below.

2010 2011 2012
Contract costs incurred during the year $2,880,000 $2,230,000 $2,190,000
Estimated costs to complete the contract at 12/31 $3,520,000 $2,190,000 $0
Billings to Fabrik during the year $3,200,000 $3,500,000 $1,700,000

1). Assume Pechstein uses the percentage of completion method. Provide the following amounts:

Revenues reported in 2010:
Expenses reported in 2011:
Gross Profit (Loss) reported in 2011:
Gross Profit (Loss) reported in 2012:

2). Assume Avengers uses the completed contract method. Provide the following amounts:

Revenues reported in 2010:
Expenses reported in 2011:
Gross Profit (Loss) reported in 2011:
Gross Profit (Loss) reported in 2012:

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