Finals

Card Set Information

Author:
atcannon
ID:
291121
Filename:
Finals
Updated:
2014-12-09 09:39:05
Tags:
Accounting 302
Folders:

Description:
Contruction Accting, Installment sales, Pensions, Bank Rec
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  1. Construction Accounting
    2 Methods
    • Percentage of Completion
    • Completed Contract
  2. Construction Accounting
    Which method is GAAP
    Percentage of Completion Method
  3. Percentage of Completion Method
    4 Points to know
    • Recognize profit as the job progresses
    • Results in better showing of annual earnings
    • Less fluctuation in net income
    • Relies on estimates (job not complete)
  4. Completed Contract Method
    4 things to know
    • Recognized income when job complete (substantial)
    • NO estimates needed
    • Results in irregular recognition of income
    • Does not reflect current operating performance
  5. Construction In Process
    3 thing to know
    what, type, contains
    • Inventory Account
    • Current Asset
    • Contains: Materials, Labor, Overhead, and Gross Profit
  6. Billings
    4 things to know
    used, replaces, type, amount
    • Used to show billings to customer
    • replaces traditional revenue account
    • contra-current asset
    • contract price
  7. Gross Profit
    % of completion
    7 step calculation
    • Total cost Incurred to Date
    • / Estimated Total Projected Cost
    • = Percent Complete to Date
    • * Estimated Total Gross Profit
    • = Total Gross Profit Earned to Date
    • - Previously Recognized Gross Profit
    • =Current Year Gross Profit
  8. Gross Profit
    Year of completion
    5 step calculation
    • Contract Price
    • - Total Actual Cost
    • = Total Gross Profit Earned to Date
    • - Previously Recognized Gross Profit
    • = Current Year Gross Profit
  9. Which accounts should equal and close at the end of the project?
    Billings & Construction in Progress
  10. Anticipated Loss
    Recognized immediately and entirely
  11. 2 Types of Losses
    • loss for contract
    • loss in current year
  12. Loss of contract
    Total estimated costs exceeds the contract price
  13. Loss in current year
    Total profit to be recognized to date is less than total profit recognized in previous years
  14. Construction
    Journal Entry
    • Dr. Construction in Progess
    • Cr. Cash
  15. Billings
    Journal Entry
    • Dr. Account Receivable
    • Cr. Billings on CIP
  16. Collections
    Journal Entry
    • Dr. Cash
    • Cr. Account Receivable
  17. Record Profit
    Journal Entry
    • Dr. Construction in Progress
    • Dr. Expenses (actual)
    • Cr. Revenues (% comp * contract) plug
  18. End of Project
    • Dr. Billings on CIP
    • Cr. Construction in Progress
  19. CIP > Billings
    net current asset
  20. Billings > CIP
    net current liability

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