SAMPLE CONSTRUCTION COMPANY
FINANCIAL STATEMENT AND
SUPPLENTARY INFORMANTION
For the Year Ended
December 31, 2011

TABLE OF CONTENTS
PAGES
Independent Accountant's Review Report on the Financial
Statements (The Representation of Management)..................1
Financial Statements
Balance Sheet................................................2
Statement of Operations and Retained Earnings................3
Statement of Cash Flows....................................4-5
Notes to the Financial Statements.........................6-16
Supplementary Data
Schedule 1-Summary of Construction Operations...............17
Schedule 2-Schedule of Completed Contracts..................18
Schedule 3-Schedule of Contracts in Process.................19
Schedule 4-Schedule of Revenues Earned......................20
Schedule 5-General and Administrative Expenses..............21

INDEPENDENT ACCOUNTANT’S REVIEW REPORT
The Shareholder and Board of Directors of Sample Construction Company
Phoenix, Arizona
I have reviewed the accompanying balance sheet of Sample Construction
Company as of December 31, 2011 and the related statements of operations and retained earnings and cash flows for the year then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole.
Accordingly, I do not express such an opinion.
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
My responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American
Institute of Certified Public Accountants. Those standards require me to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements.
I believe that the results of my procedures provide a reasonable basis for my report.
Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles generally accepted in the United States of America.
My review was made for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. The information included in the accompanying Schedules 1 through 5 is presented only for purposes of additional analysis and has been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements, and I am not aware of any material modifications that should be made to such data.
March 10, 2012
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SAMPLE CONSTRUCTION COMPANY
BALANCE SHEET
(See Independent Accountant's Review Report)
December 31, 2011
ASSETS
Current assets (Note 1)
Cash and cash equivalents (Notes 1 and 2) $ 385,000
Contracts receivable (Notes 1, 2 and 3) 1,540,000
Costs and estimated earnings in excess
of billings on uncompleted contracts
(Notes 1 and 4) 15,000
Salary advances due from employees 4,000
Note receivable, shareholder (Note 7) 5,000
Prepaid items 31,000
Total current assets $ 1,980,000
Property and equipment, net of accumulated
depreciation and amortization (Notes 1 and 5) $ 250,000
Other assets
Note receivable, shareholder (Note 7) $ 57,000
Total assets $ 2,287,000
The Notes to the Financial Statements are an integral part of this
Statement.

LIABILITIES
Current liabilities (Note 1)
Accounts payable, including retention of
$45,000 $ 450,000
Billings in excess of costs and estimated
earnings on uncompleted contracts
(Notes 1 and 4) 150,000
Current portion of long-term debt (Note 9) 75,000
Accrued liabilities
Insurance payable 40,000
Bonuses and payroll taxes payable 90,000
Sales tax payable 35,000
Deferred income taxes payable (Notes 1 and 8) 87,000
Total current liabilities $ 927,000
Long-term debt (Note 9)
Note payable $ 300,000
Less current portion above -75,000
Total long-term debt $ 225,000
Deferred income taxes (Notes 1 and 8) $ 25,000
Total liabilities $ 1,177,000
Commitments (Note 6) $ -
STOCKHOLDER’S EQUITY
Capital stock
Authorized 1,000,000 shares of common stock,
no par value, 9,804 shares issued, 4,804
shares outstanding $ 50,000
Additional paid-in capital 110,000
Retained earnings 950,000
Total stockholder’s equity $ 1,110,000
Total liabilities and stockholder's equity $ 2,287,000
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SAMPLE CONSTRUCTION COMPANY
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(See Independent Accountant’s Review Report)
For the Year Ended December 31, 2011
Contract revenues earned (Note 1) $ 11,000,000
Cost of revenues earned (Note 1) -9,300,000
Gross profit $ 1,700,000
General and administrative expenses (Note 1) -1,099,000
Income (-loss) from operations $ 601,000
Other income (-expense)
Interest income $ 20,000
Miscellaneous income 2,000
Interest expense -15,000
Total other income (-expense) $ 7,000
Net income (-loss) before (-provision) recovery
Income before income taxes $ 608,000
Provision for income taxes (Notes 1 and 8) -240,000
Net income (-loss) $ 368,000
Retained earnings, beginning of year 582,000
Retained earnings, end of year $ 950,000
The Notes to the Financial Statements are an integral part of this statement.
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SAMPLE CONSTRUCTION COMPANY
STATEMENT OF CASH FLOWS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
Cash flows provided by operating
activities
Cash received from customers $ 10,300,000
Cash paid to suppliers and
employees -10,068,000
Interest received 20,000
Miscellaneous income 2,000
Interest paid -15,000
Net cash provided by operating
activities $ 239,000
Cash flows used by investing
activities
Capital expenditures $ -93,000
Net cash used by investing
activities -93,000
Cash flows used by financing
activities
Principal payments on
long-term debt $ -80,000
Proceeds from note receivable 4,000
Net cash used by financing
activities -76,000
Net increase in cash and cash
equivalents $ 70,000
Cash and cash equivalents,
beginning of period 315,000
Cash and cash equivalents,
end of period $ 385,000
The Notes to the Financial Statements are an integral part of this statement.
-4-

SAMPLE CONSTRUCTION COMPANY
STATEMENT OF CASH FLOWS (CONTINUED)
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
Reconciliation of Net Income to Net Cash
Provided by operating activities
Net income (-loss) $ 368,000
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation $ 65,000
Change in assets and liabilities
Increase in contracts receivable -90,000
Decrease in costs and estimated
earnings in excess of billings
on uncompleted contracts 20,000
Increase in prepaid items -13,000
Increase in employee advances -1,000
Decrease in accounts payable -235,000
Increase in billings in excess of
costs and estimated earnings on
on uncompleted contracts 70,000
Decrease in bonuses and payroll
taxes payable -15,000
Increase in sales tax payable 11,000
Decrease in insurance payable -3,000
Increase in deferred income
taxes payable 62,000
Total adjustments -129,000
Net cash provided by operating
activities $ 239,000
The Notes to the Financial Statements are an integral part of this statement.
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
Company formation and operating cycle.
Sample Construction Company is a corporation duly organized and operating under the laws of the State of Arizona. The Corporation was approved by the State of Arizona on March 6, 2008.
The length of the Company's contracts vary but is typically less than one year. Therefore, assets and liabilities are classified as current and non-current based on a one year operating cycle.
1. SIGNIFICANT ACCOUNTING POLICIES
Revenue and cost recognition. The accompanying financial statements are prepared according to the percentage of completion method, and therefore take into account the profit earned to date on contracts not yet completed.
The amount considered as earned under this method is that portion of the total contract price the contractor has a right to bill, based on that portion of the contract work actually completed. It is not related to the progress billings to customers. Completion percentage is measured by the relationship of cost expended to anticipated final total cost, based on current estimates of cost to complete the project.
Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect insurance, miscellaneous expenses and depreciation costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined.
The asset, "Costs and estimated earnings in excess of billings on uncompleted contracts," represents revenues recognized in excess of amounts billed. The liability, "Billings in excess of costs and estimated earnings on uncompleted contracts," represents billings in excess of revenues recognized.
Arizona, its counties and most of its cities impose a sales tax on the
Company’s sales when Sample Construction Company is acting in the capacity of a prime contractor. The Company collects the sales tax from its customers and remits the taxes to the applicable taxing authority.
The Company’s accounting policy is to include the sales tax collected and remitted in both revenue and cost of revenues earned. For the year
December 31, 2011, the sales tax collected and reflected in cost of revenues earned is $390,000.
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Contract receivables. Contracts receivable represent the amounts billed but uncollected on completed construction contracts and construction contracts in process.
The Company uses the allowance method of recognizing uncollectible accounts receivable. The allowance method recognizes bad debt expense as a percentage of accounts receivable based on a review of the individual accounts outstanding and the Company's prior history of uncollectible accounts receivable. There was no change in the allowance from the prior year. At December 31, 2011, there is no allowance for bad debt established and in the opinion of management, all outstanding receivables at December 31, 2011 are considered fully collectible.
There not any change in the valuation allowance from the prior year.
Property, equipment, and depreciation. Property and equipment are recorded at cost. Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized when incurred.
Depreciation for all major classes of depreciable assets is provided for primarily on the straight-line method, taken over the useful lives of the assets.
Income taxes. The Company is taxed for federal and state purposes under the provisions of Subchapter C of the Internal Revenue Code.
For financial accounting purposes the Company reports income and expenses based on the percentage-of-completion method of accounting for long-term construction contracts. For tax accounting purposes the
Company reports income and expenses based on the completed contract method of accounting for long-term construction contracts.
The Company recognizes deferred income taxes according to the provisions of FASB Accounting Standards Codification 740-10-45-4 and 45-5. FASB
ASC 740 utilizes the liability method and deferred taxes are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws.
The Company accounts for tax penalties and interest in the provision for income taxes.
The Corporation adheres to accounting rules that prescribe when to recognize and how to measure the financial statement effects, if any, of income tax positions taken or expected to be taken on its income tax returns, including the position that the Corporation continues to qualify to be treated as a C Corporation for both federal and state
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) income tax purposes. These rules require management to evaluate the likelihood that, upon examination by relevant taxing jurisdictions, those income tax positions would be sustained.
Based on that evaluation, if it were more than 50% probable that a material amount of income tax would be imposed at the entity level upon examination by the relevant taxing authorities, a liability would be recognized in the accompanying balance sheet along with any interest and penalties that would result from that assessment. Should any such penalties and interest be incurred, the Corporation’s policy would be to recognize them as operating expense.
Based on the results of management’s evaluation, adoption of the new rules did not have a material effect on the Corporation’s financial statements. Further, no interest or penalties have been accrued or charged to expense as of December 31, 2011 or for the year then ended.
The Corporation’s income tax returns are subject to examination by taxing authorities for a period of three years from the date they are filed. As of December 31, 2011, the tax following tax years are subject to examination:
Jurisdiction Open Years for Filed Returns Return to be filed in 2012
Federal December 31, 2008-2010 December 31, 2011
Arizona December 31, 2008-2010 December 31, 2011
General and administrative expenses. General and administrative expenses are charged to expense as incurred.
Cash equivalents. For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Compensated absences. Compensated absences have not been accrued because the amount cannot be reasonably estimated.
Advertising costs. Advertising costs are charged to expense when incurred. For the year ended December 31, 2011, there is not any advertising expense.
2. CONCENTRATION OF CREDIT RISK
Company activities
Sample Construction Company is engaged in the construction industry as a
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
2. CONCENTRATION OF CREDIT RISK (CONTINUED) general contractor, primarily on commercial projects in the greater
Phoenix, Arizona area. The work is performed under fixed-price contracts. These contracts are undertaken by the Company without joint ventures or partnerships.
Cash and Cash Equivalents
The Company maintains noninterest bearing cash balances in two financial institutions with various locations. The Federal Deposit Insurance
Corporation provides for unlimited insurance coverage of noninterestbearing accounts through December 31, 2012. The noninterest bearing accounts are separate from, and in addition to the insurance coverage provided to a depositor's other deposit accounts.
The Company has other deposit accounts at a financial institution with two different locations. The Federal Deposit Insurance Corporation insures $250,000 of deposits at each location. At December 31, 2011, the Company has uninsured cash in the aforesaid money markets accounts in the approximate amount of $15,000.
Effective July 31, 2010, the Dodd-Frank Wall Street Reform and Consumer
Protection Act permanently raises the current standard maximum deposit insurance amount to $250,000.
Major customers
During the year ended December 31, 2011, Sample Construction Company recognized sales to three major customers that exceeded 10% of total net sales. Sales to these customers were $3,750,000 (34.1%), $3,400,000
(30.9%) $2,900,000 (26.4%) of total net sales.
Contract receivables
It is the Company's policy to pre-lien all construction work performed.
Pre-liens enable a contractor to file a lien in the event the project owner fails to live up to the provisions of the contract.
In general, a construction contractor has a number of days, defined by statue, in which to file a lien in the event of non-payment of a contract receivable. The contractor then has six months to foreclose on the property. The foreclosure forces a sheriff's sale of the aforesaid property. The bank or mortgage holder has first rights, up to the mortgage amount, to any proceeds of the sale. Any proceeds in excess of the mortgage is received by the contractor.
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
3. CONTRACT RECEIVABLES
Contract receivables
Completed contracts $ 270,000
Contracts in process 1,000,000
Unbilled receivables 20,000
Retention 250,000
Less allowance for doubtful accounts (Note 1) -
Total contract receivable $ 1,540,000
Unbilled receivables represent completed jobs for which a final billing had not been submitted as of December 31, 2011.
Historically, the Company's uncollectible contracts receivable, after direct write-offs, have been negligible. In the opinion of management, all contract receivables outstanding at December 31, 2011, are considered to be fully collectible, therefore at December 31, 2011, no doubtful account is established. Bad debt expense at December 31, 2011 is $20,000.
As of December 31, 2011, there is not any contract receivables aged greater than 90 days.
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Costs incurred on uncompleted contracts $ 3,650,000
Estimated earnings 650,000
$ 4,300,000
Less: Billings to date -4,435,000
$ -135,000
Included in accompanying balance sheet
under the following captions:
Costs and estimated earnings in excess
of billings on uncompleted contracts $ 15,000
Billings in excess of costs and estimated
earnings on uncompleted contracts -150,000
$ -135,000
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
5. PROPERTY AND EQUIPMENT
Assets
Building and land $ 150,000
Furniture and fixtures 50,000
Vehicles 350,000
Construction equipment 150,000
$ 700,000
Accumulated depreciation and amortization
Building $ 30,000
Furniture and fixtures 40,000
Vehicles 260,000
Construction equipment 120,000
$ 450,000
Net property and equipment $ 250,000
Total depreciation expense for the year ended December 31, 2011 is
$65,000.
6. COMMITMENTS
Performance and payment bonds
The Company, as a condition for entering into certain construction contracts, has outstanding surety bonds collateralized by contract receivables.
7. RELATED PARTY TRANSACTIONS
Note receivable from related party
On September 3, 2003, the Company sold its building and land to the
Company’s sole shareholder. As part of the sale, the Company signed a note receivable with it’s shareholder for $77,000. The note stipulates principal and interest payments of $700 per month, with a balloon payment, of approximately $20,000, due September, 2013. The note bears interest at 7.00% per annum. The balance due at December 31, 2011 is
$62,000. At December 31, 2011, $5,000 of the receivable is reflected as a current asset and the balance of $57,000 is recognized as a long-term asset.
Office and land lease
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
7. RELATED PARTY TRANSACTIONS (CONTINUED)
The Company has a non-cancelable operating lease on the above land and office facilities with Sample Holdings, LLC. Sample Holdings, LLC is
100% owned by the Company’s sole shareholder. The operating agreement expires December 31, 2015. The base rent requires a monthly payment of
$4,000 including sales tax. Total rental expenses for year ended
December 31, 2011 is $48,000. The Company has an option to renew the lease for an additional five years.
As of December 31, 2011, a schedule of future minimum lease payments due under the non-cancelable operating lease agreements are as follows:
Period Ending
December 31, Amount
2012 $ 48,000
2013 48,000
2014 48,000
2015 48,000
$ 192,000
There were no contingencies, minimum rentals or subleases during the year ended December 31, 2011.
8. INCOME TAXES AND DEFERRED INCOME TAXES
For the year ended December 31, 2011 the provision of income taxes include the following:
Current $ 178,000
Provision for deferred income taxes 62,000
$ 240,000
Deferred taxes are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of the enacted tax laws. However, some temporary differences cannot be identified with a particular asset or liability, such as differences between percentage-of-completion and completed contract methods for income recognition on long-term contracts. As of December 31, 2011, the net deferred tax liability is comprised of the following:
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
8. INCOME TAXES AND DEFERRED INCOME TAXES (CONTINUED)
Federal State Total
Current deferred taxes
Gross liabilities $ 70,000 $ 17,000 $ 87,000
Non-current deferred taxes
Gross liabilities $ 19,000 $ 6,000 $ 25,000
Total deferred taxes $ 89,000 $ 23,000 $ 112,000
The tax effect of significant temporary differences representing deferred tax assets and liabilities are as follows:
Long-term contracts (cumulative
financial statement revenue
greater than tax basis revenue,
resulting in a current deferred
tax liability) $ 87,000
Depreciation (financial statement
net book value greater than tax
basis net book value, resulting in
a long-term deferred tax liability $ 25,000
Total deferred tax liabilities $ 112,000
For the year ended December 31, 2011, the Company's effective income tax rate is higher than what would be expected if the federal statutory rate were applied to income from continuing operations, primarily due to state taxes, net of federal income tax benefit.
9. LONG-TERM DEBT
At December 31, 2011, long-term consist of the following:
Note payable to finance company, collateralized by
a vehicle, principal and interest due in monthly
installments of $1,200. The note bears interest at
5.000 percent and is due in full by July, 2012. $ 20,000
Note payable to finance company, collateralized by
equipment, principal and interest due in monthly
installments of $1,800. The note bears interest at
5.500 percent and is due in full by December, 2014. 80,000
Note payable to finance company, collateralized
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
9. LONG-TERM DEBT (CONTINUED)
Vehicles, principal payments due in monthly
installments of $5,000, plus interest on the
unpaid balance at the rate of 7.75% per annum,
also payable monthly. The note is due in full
February, 2014. 200,000
Total $ 300,000
Less current portion -75,000
Total long-term debt $ 225,000
A schedule of future minimum principal payments due on long-term debt outstanding at December 31, 2011, is as follows:
Year ending December 31,
2012 $ 75,000
2013 175,000
2014 50,000
Thereafter -
$ 300,000
The Company has a $400,000 line of credit commitment from XYZ Bank.
Borrowings under the line are secured by contract receivables, property, plant and equipment and the shareholder’s personal assets. The line accrues interest at the bank’s prime rate plus two percent. The prime rate at December 31, 2011 is 3.25%. There is not a balance outstanding under the line at December 31, 2011.
The Company shall timely perform and observe the following financial covenants: a. A minimum tangible net worth of $600,000. b. A maximum ratio of total liabilities to tangible net worth of 2.50 to 1. c. A minimum debt service coverage of 1.00: 1.
10. FINANCIAL INSTRUMENTS
The Companies financial assets are contract receivables, costs and estimated earnings in excess of billings on uncompleted contract, employee advances, note receivable, shareholder and pre-paid items. The
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
10. FINANCIAL INSTRUMENTS (CONTINUED)
Company’s financial liabilities are trade payables, billings in excess of costs and estimated earnings on uncompleted contracts accrued liabilities and fixed rate loans. It is management’s opinion that the
Company is not exposed to significant interest rate risk or credit risk arising from any of the aforementioned instruments (long-term assets and debt's interest rate is fixed and reflect market rates). Unless otherwise noted the fair values of these financial instruments are deemed by management to approximate their carrying values.
11. STATEMENT OF CASH FLOW
Non-Cash Investing and Financing Activity
During the year ended December 31, 2011, the Company did not have any non-cash investing and financing activities that affected assets and liabilities:
12. ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The amount considered earned under the percentage of completion method on fixed price contracts is measured by the relationship of cost expended to anticipated final total cost, based on current estimates of cost to complete the project(s). That method is used because management considers total cost to be the best available measure of progress on the contracts. Because of the inherent uncertainties in estimating costs, it is reasonably possible that the Company's recorded estimate of cost to complete the project(s) may change in the near term.
13. BACKLOG
The following schedule shows a reconciliation of backlog representing signed contracts in existence at December 31, 2011:
Balance, December 31, 2010 $ 1,295,000
New contracts, 2010 10,705,000
$ 12,000,000
Less current revenue earned, 2011 -11,000,000
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SAMPLE CONSTRUCTION COMPANY
NOTES TO THE FINANCIAL STATEMENTS
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
13. BACKLOG (CONTINUED)
Balance, December 31, 2011 $ 1,000,000
In addition, between January 1, 2012 and March 10, 2012, the Company enter into additional construction contracts in the amount of $7,800,00.
14. SUBSEQUENT EVENT CUT-OFF DATE
Management considered March 10, 2012 as the cut-off date regarding consideration of subsequent events analysis and disclosure. The date is the date the financial statements were available for issuance.
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SAMPLE CONSTRUCTION COMPANY
SCHEDULE 1-SCHEDULE OF CONSTRUCTION OPERATIONS
(See Independent Accountant’s Review Report)
For the Year Ended December 31, 2011
Revenues
Earned
Cost of
Construction
Contracts completed during the year
Total revenue, costs & gross profit
Reflected in prior years
Recognized during current year
$ 11,200,000
-3,000,000
$ 8,200,000
$ 9,600,000
-2,550,000
$ 7,050,000
Gross
Profit
$ 1,600,000
-450,000
$ 1,150,000
Contracts in process at year end
Total revenue, costs & gross profit
Reflected in prior years
Recognized during current year
Totals
$ 4,300,000
-1,500,000
$ 3,650,000
-1,400,000
$ 650,000
-100,000
$ 2,800,000 $ 2,250,000 $ 550,000
$ 11,000,000
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$ 9,300,000 $ 1,700,000

SAMPLE CONSTRUCTION COMPANY
SCHEDULE 2-SCHEDULE OF COMPLETED CONTRACTS
(See Independent Accountant’s Review Report)
For the Year Ended December 31, 2011
Adjusted
Contract Price
Cost of
Construction
Gross Profit
(Loss)
Gross Profit
(Loss)
In Prior Period
Current Gross
Profit (Loss)
Earned
Gross
Profit
(Loss)
Percent
Job
No.
Job Description
113 Chandler Office
115 Central Apts.
118 Rancho Market
119 Bell Towers
120 Strip Center
$ 1,700,000
1,800,000
1,400,000
2,900,000
3,400,000
$ 1,440,000
1,500,000
1,220,000
2,480,000
2,960,000
$ 260,000
300,000
180,000
420,000
440,000
$ 180,000
190,000
80,000
-
-
$ 80,000
110,000
100,000
420,000
440,000
15.3%
16.7
12.9
14.5
12.9
$ 11,200,000 $ 9,600,000 $ 1,600,000 $ 450,000 $ 1,150,000
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SAMPLE CONSTRUCTION COMPANY
SCHEDULE 3-SCHEDULE OF CONTRACTS IN PROCESS
(See Independent Accountant’s Review Report)
For the Year Ended December 31, 2011
Job to Date
Job
No.
Job Name
121 Phoenix Office
122 Medical Center
Adjusted
Contract Price Amount Billed
Revenues
Earned
Cost of
Construction
Gross Profit
(Loss)
Gross Profit
(Loss) in Prior
Period
$ 1,550,000
3,750,000
$ 1,290,000
3,145,000
$ 1,305,000
2,995,000
$ 1,105,000
2,545,000
$ 200,000
450,000
$ 100,000
-
Totals $ 5,300,000 $ 4,435,000 $ 4,300,000 $ 3,650,000 $ 650,000 $ 100,000

Management Estimates
Current Gross
Profit (Loss)
Earned
Under-Billed
(Over-Billed)
Percent
Done
Work Load
Remaining
Cost to
Complete
Future Gross
Profit (Loss)
Final Estimated
Gross Profit
(Loss) G.P. %
$ 100,000
450,000
$ 15,000
(150,000)
84.2% $ 245,000
79.9% 755,000
$ 207,000 $ 38,000
640,000 115,000
$ 238,000
565,000
15,000
$ 550,000 $ -150,000 $ 1,000,000 $ 847,000 $ 153,000 $ 803,000
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15.4%
15.1%

SAMPLE CONSTRUCTION COMPANY
SCHEDULE 4-SCHEDULE OF COST OF REVENUES EARNED
(See Independent Accountant’s Review Report)
For the Year Ended December 31, 2011
COST CATEGORY DOLLAR AMOUNT
Direct Cost:
Labor and overhead $ 400,000
Material 800,000
Subcontractors 6,800,000
Equipment rentals 100,000
Other direct cost 455,000
Total direct cost $ 8,555,000
Indirect cost:
Superintendents $ 250,000
Fringe benefits 30,000
Vehicle expense 60,000
Depreciation 25,000
Insurance 200,000
Repairs and maintenance 40,000
Travel 115,000
Small tools and supplies 25,000
Total indirect cost $ 745,000
TOTAL COST $ 9,300,000
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SAMPLE CONSTRUCTION COMPANY
SCHEDULE 5-SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
(See Independent Accountant's Review Report)
For the Year Ended December 31, 2011
Amount
Advertising and promotion $ 4,100
Bad debt expense 20,000
Contributions 8,700
Common area expense 2,500
Depreciation 40,000
Dues and subscriptions 18,000
Employee goodwill 10,000
Entertainment and meals 4,900
Insurance 24,000
Licenses and taxes 5,700
Miscellaneous expense 2,600
Office expenses 36,000
Office salaries 116,000
Officer's salary 636,500
Payroll taxes 43,000
Professional fees 28,000
Rent expense 48,000
Repairs and maintenance 6,000
Telephone and utilities 19,000
Travel expense 3,000
Vehicle expense 23,000
$ 1,099,000
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