University of Luzon

College of Accountancy
ACC309 Quiz
Name:_______________________________________________Schedule:______________________Score:________

PROBLEM 1
During 2015, Durabuilt Engineering entered into an agreement to construct an office building at a contract price of
P50,000,000. Construction data were as follows:
2015 2016 2017
Construction costs incurred P7,500,000 P27,000,000 P6,300,000
Estimated costs to complete 30,000,000 8,625,000 -
Progress billings 8,000,000 36,000,000 6,000,000
Collections from client 5,500,000 33,000,000 11,500,000

Required:
a) Determine the revenue, cost of revenue and gross profit to be recognized in 2015, 2016, and 2017 using the
percentage-of-completion method.
2015 2016 2017
Revenue ____________________________ ____________________________ ____________________________
Cost of revenue ____________________________ ____________________________ ____________________________
Gross profit ____________________________ ____________________________ ____________________________

b) Prepare the necessary journal entries to record construction activities for 2017. (percentage-of-completion
method)

c) Determine the revenue, cost of revenue and gross profit to be recognized in 2015, 2016, and 2017 using the
zero-profit method.
2015 2016 2017
Revenue ____________________________ ____________________________ ____________________________
Cost of revenue ____________________________ ____________________________ ____________________________
Gross profit ____________________________ ____________________________ ____________________________

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University of Luzon
College of Accountancy
ACC309 Quiz

PROBLEM 2
New Dimension Construction Company began operation on January 1, 2015. During the year, the company entered
into a contract with Centurion Company to construct a manufacturing facility. At that time, New Dimension estimated
that it would take five years to complete the facility at a total cost of P20,000,000. The total contract price for
construction of the facility is P25,000,000. During the year, the company incurred P4,400,000 in construction costs
related to the construction project. Centurion was billed P5,000,000 and paid 10% of the contract price.
Required:
a) Determine the amount of gross profit to be recognized for the year ended December 31, 2015.
____________________________
b) Determine the balances of the following accounts:
Accounts receivable ____________________________
Construction in progress ____________________________
Progress billings ____________________________

PROBLEM 3
In 2015, Pyramid Builders Inc. was awarded a fixed price contract for a factory building at a price of P26,000,000.
Pyramid uses the percentage-of-completion method and the following data are obtained in the project:
At December 31, 2015 At December 31, 2016
Percentage of completion 20% 60%
Estimated total cost at completion P19,500,000 P20,800,000
Income recognized to date 1,300,000 3,120,000

Required: Determine the contract cost incurred in 2015 and 2016.

2015 ____________________________
2016 ____________________________

PROBLEM 4
In 2015, Fast Construction Corporation began construction work under a three-year contract. The contract price is
P16,000,000. Fast uses the percentage of completion method for financial reporting purposes. The financial
statement presentation relating to this contract at December 31, 2015, is as follows:

Statement of financial position

Accounts receivable P300,000
Construction in progress P1,000,000
Billings on construction contract (940,000)
Cost of uncompleted contracts in excess of billings 60,000

Income statement
Profit (before tax) on the contract recognized in 2015 P200,000

Required:
a) What was the cost of construction actually incurred in 2015? ____________________________
b) How much cash was collected in 2015 on this contract? ____________________________
c) What was estimated cost to complete as of the end of 2015? ____________________________
d) What was the estimated percentage of completion used to calculate profit in 2015? ____________________________

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University of Luzon
College of Accountancy
ACC309 Quiz

PROBLEM 5
The Triad Construction Inc., a company organized three years ago, had two projects for which it reported the
following as of the end of 2015:
Binondo Project Pasig Project
Contract Price P48,000,000 P80.600,000
Cost incurred to date-2015 12,400,000 14,000,000
Percentage of completion 25% 20%

The company uses the percentage-of-completion method of accounting for its construction contracts.
Required: Determine the amount of gross profit to be recognized by Triad in 2015. ____________________________

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