Response:
2021: income 3,000,000
net profit 510,000
2022: income 4,800,000
net profit 816,000
2023: income 2,200,000
net profit 374,000
Journal Entries for 2022:
construction assets 3,984,000 debit
other account 3,984,000 credit
--to log expenses incurred--
accounts receivable 4,444,000 debit
deferred revenue 4,444,000 credit
--to record the billed amount
cash 3,900,000 debit
accounts receivable 3,900,000 credit
--to reflect cash received--
deferred revenue 4,800,000 debit
revenue from construction 4,800,000 credit
---to note revenue earned using
the percentage of completion method---
Clarification:
2021:
expenses amounted to 2,490,000
estimated total costs:
2,490,000 + 5,810,000 = 8,300,000
proportion: 2,490,000 / 8,300,000 = 30%
income 10,000,000 x 30% = 3,000,000
expenses 2,490,000
net profit 510,000
2022:
expenses totaled 3,984,000
total expenses: 2,490,000 + 3,984,000 + 1,826,000 = 8,300,000
proportion: 3,984,000 / 8,300,000 = 48%
income 10,000,000 x 48% = 4,800,000
expenses 3,984,000
net profit 816,000
2023:
finalized:
remaining income: 100% - 48% - 30% = 22%
10,000,000 x 22% = 2,200,000
expenses incurred 1,826,000
net profit 374,000
