Question
During 2020, Nilsen Company started a construction job with a contract price of $1.6 million. The job was completed in 2022. The following information is
During 2020, Nilsen Company started a construction job with a contract price of $1.6 million. The job was completed in 2022. The following information is available. The contract is non-cancellable.
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| 2020 | 2021 | 2022 |
|---|---|---|---|
| Costs incurred to date | $400,000 | $825,000 | $1,070,000 |
| Estimated costs to complete | 600,000 | 275,000 | -0- |
| Billings to date (non-refundable) | 300,000 | 900,000 | 1,600,000 |
| Collections to date | 270,000 | 810,000 | 1,425,000 |
Instructions
a.
Calculate the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.
b.
Prepare all necessary journal entries for 2021.
c.
Calculate the amount of gross profit to be recognized each year, assuming the completed-contract method is used.
use the following table to complete this question:
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| 2017 | 2018 | 2019 |
| CONTYRACT PRICE |
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| COSTS: |
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| OPENING BALNACE OF COSTS |
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| COSTS INCURRED DURING THE YEAR |
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| COSTS TODATE |
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| ESTIMATED COSTS TO COMPLETE |
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| ESTIMATED TOTAL COSTS |
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| PERCENT COMPLETE |
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| REVENUE TODATE |
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| LESS: REVENUE RECOGNIZED PREVIOUSLY |
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| REVENUE FOR THE YEAR |
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| CONSTRUCTION COSTS FOR THE YEAR |
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| PROFITS FOR THE YEAR |
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Principles Of Financial Accounting (Chapters 1-17)
Authors: John Wild
25th Edition
1260780147, 9781260780147
