Question
In 2013, McArthur-Douglas contracted to build an airplane for $12,000,000.Data relating to the contract are as follows: ($ in thousands) 2013 2014 Costs incurred during
In 2013, McArthur-Douglas contracted to build an airplane for $12,000,000.Data relating to the contract are as follows:
($ in thousands)
20132014
Costs incurred during the year..........................$2,000$6,000
Estimated costs to complete as of year-end......6,000-
Billings during the year...................................6,0006,000
Cash collections during the year.......................5,0007,000
Required:
Determine the gross profit that McArthur-Douglas should recognize in both 2013 and 2014 using thepercentage-of-completion method.Show calculations.
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