Question
In 2020, Company began construction work on a contract with a contract price of $8,400,000. Other data are as follows: 2020 2021 costs inccured to
In 2020, Company began construction work on a contract with a contract price of $8,400,000. Other data are as follows:
| 2020 | 2021 | |
| costs inccured to date | 2,400,000 | 5,250,000 |
| estimated costs to complete | 3,600,000 | 1,750,000 |
| billings to date | 1,800,000 | 7,800,000 |
| collections to date | 1,240,000 | 6,200,000 |
Required
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Assuming Company uses the percentage-of-completion method:
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How much gross profit should be recognized in 2020?
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Show Company journal entries for activity during 2020.
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Show Company journal entry to record revenue at the end of 2020.
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How much gross profit should be recognized in 2021?
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Show Company journal entry to record revenue at the end of 2021.
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Assuming Company uses the completed-contract method:
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How much construction revenue should be recognized in 2020?
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How much construction revenue should be recognized in 2021?
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Fundamental Accounting Principles
Authors: John J Wild, Ken Shaw
25th Edition
9781260247985
