On March 1, 2014, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,156,000 and will take 3 years to complete. The contract price was $3,125,000. The following information pertains to the construction period.

A. Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used
Gross profit recognized in 2014
Gross profit recognized in 2015
Gross profit recognized in 2016
B. Prepare all necessary journal entries for 2016
C. Prepare a partial balance sheet for December 31, 2015, showing the balances in the receivables and inventory accounts.

Transcribed Image Text:

2014 S754,600 S1,584,830 S2,059,000 1,401,400|586,170 821,000 1,819,000 3,125,000 779,000 1,672,000 2,979,000 2015 2016 Cost to date Estimated costs to complete Progress billings to date cash collected