Bonobo Builders Company has agreed on a contract price of $4,000,000 to build a hospital. The contract period is 5 years and costs incurred are as follows.

	2020	2021	2022	2023	2024
Costs incurred in year	100,000	250,000	300,000	200,000	150,000
Estimated costs to complete	850,000	650,000	400,000	200,000	-
Progress billings	200,000	600,000	1,000,000	200,000	2,000,000
Cash collections	150,000	500,000	800,000	200,000	1,500,000

Instructions

Bonobo Builders Company would like you to compute the following amounts for this construction contract.

1. Compute the amount of gross profit recognized on this contract at the end of year 2023.
2. Compute the ending balance of accounts receivable at December 31, 2023.
3. Determine whether the constructions in progress account should be classified as an asset or a liability at December 31, 2023.

Computations:

Gross profit:

Ending accounts receivable:

Requirement 3: