E18-26 (Recognition of profit on long-time contracts) during 2014, Nilsen Company started a construction job with a contract price of $1,600.000. The job was completed in 2016. The following information is available.

	2014	2015	2016
Costs incurred to date	$400,000	$825,000	1,070,000
Estimated costs to complete	6,000,000	275,000	0
Billings to date	3,000,000	900,000	1,600,000
Collections to date	270,000	810,000	1,425,000

Instructions

(a) Compute 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 2015

(c) Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used

Chapter 18 Revenue Recognition - Intermediate Accounting 15 th Edition Kieso, Weygandt, Warfield E18-26 (Recognition of profit on long-time contracts) during 2014, Nilsen Company started a construction job with a contract price of $1,600.000. The job was completed in 2016. The following information is available. Costs incurred to date Estimated costs to complete Billings to date Collections to date 2014 $400,000 6,000,000 3,000,000 270,000 2015 $825,000 275,000 900,000 810,000 2016 1,070,000 0 1,600,000 1,425,000 Instructions (a) Compute the amount of gross profit to be recognized each year, assuming the percentage-ofcompletion method is used. (b) Prepare all necessary journal entries for 2015 (c) Compute the amount of gross profit to be recognized each year, assuming the completedcontract method is used