ASSIGNMENT 1: REVENUE RECOGNITION INTERMEDIATE ACCOUNTING II (ACC320) SEMESTER II, 2022-2023

Deep Construction Company has a contract to construct a 4,500,000 showroom building for Landslide Incorporation. The contract is to start in July 2020, and the building is to be completed in October 2022. Following are contract costs incurred during the year, estimated costs to complete the contract, billings to and collections from Landslide Incorporation for 2020, 2021, and 2022. 2020 2021 2022 Cost incurred during the year $ 1,000,000 $ 1,916,000 $ 2,360,250 Estimated cost to complete 3,000,000 $ 1,640,250 - Progress billing to date 900,000 3,300,000 4,500,000 Collections to date 750,000 2,500,000 4,300,000

REQUIRED: a) Using percentage-of-completion method, prepare schedules to compute the profit and loss to be recognized as a result of this contract for the year ended October 31, 2020, 2021 and 2022.

b) Using cost recovery method, prepare schedules to compute the profit and loss to be recognized as a result of this contract for the year ended October 31, 2020, 2021 and 2022.

c) Prepare a complete set of journal entries for 2022 (using the percentage-of-completion method).