In 2021, Gerrard Enterprises Inc. was contracted to build an apartment building for $5.2 million. The project was expected to take three years and Gerrard estimated the costs to be $4.3 million. Actual results from the project are as follows:

Required:

a. Calculate the amount of gross profit to be recognized each year using the percentageof-
completion method.

b. Show how the details of this contract would be disclosed on the balance sheet and income statement in 2022.

Transcribed Image Text:

Accumulated costs to date Estimated costs to complete the project Customer billings to date Cash collected to date 2021 $1,100,000 2022 $3,400,000 2023 $4,500,000 3,200,000 1,000,000 1,500,000 3,300,000 5,200,000 1,000,000 3,000,000 5,200,000