In 2013, Lucy's Chaotic Construction Corporation began construction work under a three- year contract. The contract price is $1,600,000. Lucy uses the percentage-of-completion method for financial reporting purposes. The financial statement presentation relating to this contract at December 31, 2013, is as follows:
Balance Sheet
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Accounts receivable (from construction progress billings) Construction in progress
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$ 100,000
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$ 30,000
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Less: Billings on construction contract
Cost of uncompleted contracts in excess of billings
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(94,000)
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6,000
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Income Statement
Income (before tax) on the contract recognized in 2013 $ 20,000
Required:
- What was the cost of construction actually incurred in 2013?
- How much cash was collected in 2013 on this contract?
- What was the estimated cost to complete as of the end of 2013?
- What was the estimated percentage of completion used to calculate income in 2013?