Suarez Ltd. entered into a contract on January 1, 2020, to construct a small soccer stadium for a local team. The total fixed price for the contract is $35 million. The job was completed in December 2021. Details of the project are as follows:

Required:

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

b. Prepare all the required journal entries for both years.

Transcribed Image Text:

Costs incurred in the period Estimated costs to complete the project Customer billings in the period Cash collected in the period 2020 2021 $20,000,000 $11,000,000 10,000,000 18,000,000 17,000,000 17,000,000 15,000,000