Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2015, Hamilton began work under contract

#E2-D2, which provided for a contract price of £2,200,000. Other details follow:

Instructions

(a) What portion of the total contract price would be recognized as revenue in 2015? In 2016?

(b) Assuming the same facts as those above except that Hamilton uses the cost-recovery method of accounting, what portion of the total contract price would be recognized as gross profit in 2016?

(c) Prepare a complete set of journal entries for 2015 (using the percentage-of-completion method).

Transcribed Image Text:

2015 2016 Costs incurred during the year 640,000 1,425,000 Estimated costs to complete, as of December 31 960,000 -0- Billings during the year 420,000 1,680,000 Collections during the year 350,000 1,500,000