Question
Ivanhoe Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will
Ivanhoe Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $599,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $905,000. The following data pertain to the construction period
| 2020 | 2021 | 2022 | ||||
| Costs to date | $257,570 | $413,310 | $609,000 | |||
| Estimated costs to complete | 341,430 | 185,690 | 0 | |||
| Progress billings to date | 270,000 | 551,000 | 905,000 | |||
| Cash collected to date | 240,000 | 501,000 | 905,000 |
(a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter 0. Do not leave any fields blank.)
| Gross profit recognized in 2020 | $ | |
| Gross profit recognized in 2021 | $ | |
| Gross profit recognized in 2022 | $ |
(b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter 0. Do not leave any fields blank.)
| Gross profit recognized in 2020 | $ | |
| Gross profit recognized in 2021 | $ | |
| Gross profit recognized in 2022 | $ |
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