Compare the four primary methods of construction accounting discussed in this chapter and compute…

Compare the four primary methods of construction accounting discussed in this chapter and compute the reported revenue, expenses, and income or profit for each, for a contractor which has only one project for the whole year as reflected in the following. Assume January 1 through December 31 fiscal periods. Ignore any retention or tax considerations for this exercise. The reporting date is 12/31/2019.       (a) Contract volume of $1 million.  (b)Included in the contract value is a 5% fee.   (c)$500,000 was invoiced and received as of 11/30/2019.&
View complete question » Compare the four primary methods of construction accounting discussed in this chapter and compute the reported revenue, expenses, and income or profit for each, for a contractor which has only one project for the whole year as reflected in the following. Assume January 1 through December 31 fiscal periods. Ignore any retention or tax considerations for this exercise. The reporting date is 12/31/2019.       (a) Contract volume of $1 million.  (b)Included in the contract value is a 5% fee.   (c)$500,000 was invoiced and received as of 11/30/2019.    (d)All invoice values include a proportional share of fee.   (e) An additional $100,000 is invoiced as of 12/31/2019, due 1/10/2020.       (f) $450,000 has been paid by the GC in labor, material, and subcontractor expenses through 12/15/2019.      (g)$90,000 was invoiced by subcontractors and suppliers for month ending 12/31/2019, payable ten days after receipt of payment from the client. That is factored into this month’s $100,000 pay request. (h) The balance of the construction costs will be paid in full by 3/31/2020 by the client to the GC and the GC to its subcontractors and suppliers and craftsmen. (i) Theoretically the contractor’s expenses will exactly equal its estimated costs, but it never happens this way.

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