Question
Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2014, Hamilton began work under contract #E2-D2, which provided for a contract price of $2,084,000.
Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2014, Hamilton began work under contract #E2-D2, which provided for a contract price of $2,084,000. Other details follow:
2014 | 2015 | |||
Costs incurred during the year | $633,750 | $1,754,000 | ||
Estimated costs to complete, as of December 31 | 991,250 | 0 | ||
Billings during the year | 399,000 | 2,084,000 | ||
Collections during the year | 291,000 | 1,768,000 |
(a) What portion of the total contract price would be recognized as revenue in 2014? In 2015?
Revenue recognized in 2014:
Revenue Recognized in 2015:
(b) Assuming the same facts as those above except that Hamilton uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2015?
Revenue recognized in 2015:
(c) Prepare a complete set of journal entries for 2014 (using the percentage-of-completion method). (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables.)
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