Question
ANSWER QUESTION ONLY IF YOU CAN SHOW CALCUALTIONS. THANKS 18-12B (Recognition of Profit on Long-Term Contracts) During 2014 AFCO started a construction job with a
ANSWER QUESTION ONLY IF YOU CAN SHOW CALCUALTIONS. THANKS
18-12B (Recognition of Profit on Long-Term Contracts) During 2014 AFCO started a construction job
with a contract price of $2,500,000. The job was completed in 2016. The following information is available.
2014 2015 2016
Costs incurred to date $ 600,000 $1,435,000 $2,100,000
Estimated costs to complete 1,400,000 615,000 0
Billings to date 100,000 500,000 2,500,000
Collections to date 100,000 300,000 2,000,000
Instructions
(a) Compute the amount of gross profit to be recognized each year assuming the percentage-ofcompletion
method is used. PLEASE SHOW CALCULATIONS
(b) Prepare all necessary journal entries for 2015. PLESE SHOW CALCULATIONS
(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract
method is used. PLEASE SHOW CALCULATIONS
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