(HH)

is building a luxury condominium for a contract price of

$59,000,000.

This is estimated to be a three-year project with an estimated cost of

$43,000,000.

HH

uses the percentage-of-completion method of revenue recognition, using the cost-to-cost method of estimating the percentage complete. The following is the best available information at the end of each year:

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Happy Home (HH) is building a luxury condominium for a contract price of $59,000,000. This is estimated to be a three-year project with an estimated cost of $43,000,000. HH uses the percentage-of-completion method of revenue recognition, using the cost-to-cost method of estimating the percentage complete. The following is the best available information at the end of each year: (Click the icon to review the contract data) Requirements Compute the amount of gross profit to be recognized in Year 1, Year 2, and Year 3. Show computations in tabular form. b. Prepare all the journal entries required in Year 2 Prepare the journal entry required in Year 3 to close the accounts related to the project. At the end of Year 2, if the estimated cost to complete is $26 million (instead of $21 million), how much gross profit would be recognized in Year 2? a. c. d. Requirement a. Compute the amount of gross profit to be recognized in Year 1, Year 2, and Year 3. Show computations in tabular form. (Round the percent to two decimal places, X.XX. Enter a "0" for any zero balances. Use a minus sign or parentheses to enter a loss. Enter amounts in thousands.) Year 2 Year 3 Year 1 11000 - X Data Table % % % (in thousands) Estimated gross profit Percent complete Gross profit to date Less: gross profit previously recognized Current gross profit (loss) Year 1 Year 2 Year 3 $ 24.000 $ 15,000 (in $ thousands) Cost incurred each year Estimated costs to complete Billings on construction in progress Cash collected 21,000 0 11,000 $ 33,000 13,000 7,000 22.000 24.000 Requirement b. Prepare all the journal entries required in Year 2. (Record debits first, then credits. Explanations are not required. Enter amounts in thousands.) Begin by preparing the entry to show the costs Happy Home incurred on the project during Year 2. 19,000 33,000 Debit Credit Date Year 2 Accounts Construction in progress Cash Print Done Next, prepare the journal entry to show customer billings during Year 2. Debit Credit Date Year 2 Accounts Accounts receivable Billings on construction-in-progress Happy Home (HH) is building a luxury condominium for a contract price of $59,000,000. This is estimated to be a three-year project with an estimated cost of $43,000,000. HH uses the percentage-of-completion method of revenue recognition, using the cost-to-cost method of estimating the percentage complete. The following is the best available information at the end of each year: B Click the icon to review the contract data.) Requirements Compute the amount of gross profit to be recognized in Year 1, Year 2, and Year 3. Show computations in tabular form. Prepare all the journal entries required in Year 2 c. Prepare the journal entry required in Year 3 to close the accounts related to the project. At the end of Year 2, if the estimated cost to complete is $26 million (instead of $21 million), how much gross profit would be recognized in Year 2? a. b. d. Prepare the journal entry to show collections from the customer during Year 2. Date Accounts Debit Credit Year 2 Cash Data Table - X Accounts receivable Year 3 15,000 Now prepare the compound entry to recognize revenue and expenses on the project. Year 1 11,000 $ 33,000 13,000 Year 2 24,000 $ 21,000 Date (in thousands) Cost incurred each year Estimated costs to complete Billings on construction in progress Cash collected Debit Credit 0 22.000 24,000 Year 2 Accounts Cost of goods sold Revenue 7,000 19,000 33,000 Construction in progress Print Done Requirement c. Prepare the journal entry required in Year 3 to close the accounts related to the project. (Record debits first, then credits. Explanations are not required. Enter amounts in thousands.) Prepare the journal entry required in Year 3 to close the accounts related to the project. Date Debit Credit Year 3 Accounts Billings on construction-in-progress Construction in progress Requirement d. At the end of Year 2, if the estimated cost to complete is $26 million instead of $21 million), how much gross profit would be recognized in Year 2? Requirement d. At the end of Year 2, if the estimated cost to complete is $26 million (instead of $21 million), how much gross profit would be recognized in Year 2? Compute the amount of gross profit to be recognized in Year 2 using the revised estimated cost. (Round the percent to two decimal places, X.XX. Enter a "0" for any zero balances. Use a minus sign or parentheses to enter a loss. Enter amounts in thousands.) Year 2 (in thousands) Estimated gross profit Percent complete (or 100% if an estimated loss) Gross profit to date Less: gross profit previously recognized Current gross profit (loss)