Excel Sheet: You Are A Fresh Accounting Graduate
Excel Sheet You are A Fresh Accounting Graduate You Have Landed A Jo
You are a fresh accounting graduate. Your manager has assigned you to prepare a report for Long House Company, an important client. The report should include a schedule of gross profit (loss) to be reported for multiple projects, as well as journal entries for projects A and B based on their financial data. This report is due by the next morning at 8 a.m.
Paper For Above instruction
Introduction
As a newly employed accounting graduate at a prominent firm, the task of preparing accurate financial reports is both an essential responsibility and an immediate stepping stone in professional development. The specific assignment involves creating a comprehensive schedule of gross profit (or loss) for several projects undertaken by Long House Company. Moreover, the task requires recording journal entries for two specific projects, A and B, based on their financial data to accurately reflect project performance in the company's accounting records. This exercise not only tests technical accounting skills but also emphasizes the importance of precise data analysis, journal entry preparation, and financial reporting in a real-world setting.
1. Preparation of Schedule of Gross Profit (Loss)
The first step involves creating a detailed schedule that calculates the gross profit or loss for each project. The relevant data provided includes the total contract price, billings, cash collections, contract costs incurred, and estimated costs to complete. The core objective is to determine how much profit or loss each project contributes to the overall financial position of the company at the reporting date.
Key Data for Projects
| Project | Total Contract Price | Billings Through 12/31/12 | Cash Collections Through 12/31/12 | Contract Costs Incurred | Estimated Additional Costs to Complete |
|---|---|---|---|---|---|
| A | $200,000 | $100,000 | $80,000 | $120,000 | $90,000 |
| B | $250,000 | $50,000 | $45,000 | $40,000 | ? |
| C | $180,000 | ||||
| D | $100,000 | $10,000 | $5,000 | $80,000 | $20,000 |
| E | $140,000 |
The computation of gross profit (loss) involves recognizing revenue, costs incurred, and the estimation of profit or loss based on the percentage of completion method, which is most appropriate given the data provided.
2. Calculation of Gross Profit/Loss for Each Project
For projects with available data, progress is assessed through the percentage of costs incurred relative to total estimated costs, and profits are recognized accordingly. The formulas involve:
- Percentage of Completion = Contract Costs Incurred / (Contract Costs Incurred + Estimated Remaining Costs)
- Recognized Revenue = Total Contract Price × Percentage of Completion
- Gross Profit (Loss) = Recognized Revenue - Contract Costs Incurred
3. Journal Entries for Projects A and B
Following the profit recognition process, journal entries are prepared to reflect the revenue earned and costs incurred. Typical entries include debiting accounts receivable or cash, crediting revenue, and recording costs as expenses. For projects A and B, based on their latest data, these entries capture the financial activity relevant to the reporting period.
Conclusion
This exercise demonstrates the integration of accounting principles such as revenue recognition, cost tracking, and journal entry preparation in the context of real-world project accounting. Accurate reporting ensures transparency and proper financial management, which are critical for maintaining client trust and regulatory compliance.
References
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- Financial Accounting Standards Board (FASB). (2020). Revenue Recognition (ASC 606).
- International Financial Reporting Standards (IFRS). (2019). IFRS 15 – Revenue from Contracts with Customers.
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