Repeat the requirements of P8-9 assuming Wayne Computer Consultants uses the completed-contract method to report its long-term contracts.

Data from P8-9

R. Wayne Computer Consultants, Incorporated develops and installs integrated computer systems and networks for large utilities. On January 2, 2018. The company signed a contract to deliver an electricity deployment system for a grid coveting three New England states. The contract paid R. Wayne a fixed Fee of $18,000,000. Wayne Computer Consultants uses the percentage-of-completion method (cost-to-cost approach) to report its long-term contracts. Other relevant information related to the contract is presented in the following table.

Required

a. Compute the gross profit and revenue to be recognized each year of the contract.

b. Prepare the journal entries required for each year of the contract.

c. Prepare the t-accounts for construction in progress, billings on construction in progress, and accounts receivable.

d. Determine the net asset (liability) for each year o f the contract on December 31.

Transcribed Image Text:

Contractpr ce $18,000,000 2018 $ 4,500 000 2019 2020 Actual construction costs incurred dur ng the year Construct on costs incurred in pr or years Estimated costs to complete Estimatedtotal costs Progress billings məde during the year Cashcol ect ons during the year $ 5 000,000 $10,500 000 $ 6,000,000 $ 4,500,000 $10.500.000 $ 2.625,000 $15,000 000 $13.125,000 $15,500,000 $ 6,600,000 $ 8,400,000 $ 3,000,000 $ 6,000,000 $ 6,000 000 $ 6,000,000