Extra credit: long-term contracts Question 1: Assume Nortel Network contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2021 und was completed in 2023. Data relating to the contract are summarized below: 2021 2022 2023 Costs incurred during the year $ 600,000 $575.000 725.000 Estimated costs to complete as of 12/31 1.200,000 800,000 0 Billings during the year 480,000 620,000 900,000 Cast collections during the year 350,000 600,000 1,050,000 Required: 1. Prepare the joumal entries for cost of construction, billings, and cash collection in years 2021 2022, and 2023 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022 and 2023 assuming Nortel recognizes revenue over time according to percentage of completion 3. Compute the amount of revenue and gross profit or loss to be recognized in 2021. 2022 and 2023 assuming this project does not qualify for revenue recognition over time 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2021 assuming Nortel recognizes revenue over time according to percentage of completion 5. Prepare a partial balance sheet to show how the information related to this contract would be pesented at the end of 2021 assuming this project does not qualify for revenue recognition over time Question 2: Assume Nortel Networks contracted to provide a customer with internet infrastructure for $2,000,000. The project began in 2021 and was completed in 2023. Data relating to the contract are summarized below 2021 Costs incurred during the year Estimated costs to complete as of 1331 Billings during the year Cash collections during the year $ 600,000 1.200,000 480.000 350,000 2022 $375,000 975,000 620.000 600.000 2023 925.000 0 900,000 1,050,000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022, and 2003 assuming Nortel recognizes reventie over time according to percentage of completion. Prepare journal entries for recognizing revenue in each your 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022 and 2021 assuming this project does not qualify for revenue recognition over time. Prepare journal entries for recognizing revenue in each year Extra credit: long-term contracts Question 1: Assume Nortel Network contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2021 und was completed in 2023. Data relating to the contract are summarized below: 2021 2022 2023 Costs incurred during the year $ 600,000 $575.000 725.000 Estimated costs to complete as of 12/31 1.200,000 800,000 0 Billings during the year 480,000 620,000 900,000 Cast collections during the year 350,000 600,000 1,050,000 Required: 1. Prepare the joumal entries for cost of construction, billings, and cash collection in years 2021 2022, and 2023 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022 and 2023 assuming Nortel recognizes revenue over time according to percentage of completion 3. Compute the amount of revenue and gross profit or loss to be recognized in 2021. 2022 and 2023 assuming this project does not qualify for revenue recognition over time 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2021 assuming Nortel recognizes revenue over time according to percentage of completion 5. Prepare a partial balance sheet to show how the information related to this contract would be pesented at the end of 2021 assuming this project does not qualify for revenue recognition over time Question 2: Assume Nortel Networks contracted to provide a customer with internet infrastructure for $2,000,000. The project began in 2021 and was completed in 2023. Data relating to the contract are summarized below 2021 Costs incurred during the year Estimated costs to complete as of 1331 Billings during the year Cash collections during the year $ 600,000 1.200,000 480.000 350,000 2022 $375,000 975,000 620.000 600.000 2023 925.000 0 900,000 1,050,000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022, and 2003 assuming Nortel recognizes reventie over time according to percentage of completion. Prepare journal entries for recognizing revenue in each your 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022 and 2021 assuming this project does not qualify for revenue recognition over time. Prepare journal entries for recognizing revenue in each year
