(Recognition of Revenue on Long-Term Contract and Entries) Amy Van Dyken Construction Company uses the percentage-of-completion method of accounting. In 2007, Van Dyken 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 2007? In 2008?

(b) Assuming the same facts as those above except that Van Dyken uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2008?

(c) Prepare a complete set of journal entries for 2007 (using the percentage-of-completion method).

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Costs incurred during the year Estimated costs to complete, as of December 31 Billings during the year Collections during the year 2007 2008 $ 480,000 $1,425,000 1,120,000 -0- 420,000 1,680,000 350,000 1,500,000