McCombs Contractors received a contract to construct a mental health facility for $2,500,000 Construction was begun in 2008 and completed in 2011 In 2010 McCombs successfully negotiated a contract change order of $3,000,000 Cost and other data are presented below Costs incurred during the year 2008 2009 2010 2011 $1,000,000 $1,100,000 $1,200,000 $1,000,000 Estimated costs to complete 1,200,000 1,000,000 2,000,000 0 Billings during the year 1,200,000 800,000 1,000,000 2,500,000 Cash collections during the year 1,000,000 1,000,000 1,100,000 2,400,000 Scenario1 Assume that McCombs uses the percentage of completion method for revenue recognition Required Compute the amount of gross profit recognized for each year from 2008 through 2011 Required Prepare all journal entries to record costs, billings, collections, and profit recognition for 2008 Required Calculate and provide the balance sheet amount (properly classified and labeled) for each December 31 from 2008 through 2011 Scenario 2 Assume that McCombs uses the completed contract method for revenue recognition Required Compute the amount of gross profit recognized by McCombs during each year from 2008 through 2011 McCombs Contractors received a contract to construct a mental health facility for $2,500,000 Construction was begun in 2008 and completed in 2011 In 2010 McCombs successfully negotiated a contract change order of $3,000,000 Cost and other data are presented below 2008 2009 2010 2011 Costs incurred during the year $1,000,000 $1,100,000 $1,200,000 $1,000,000 Estimated costs to complete 1,200,000 1,000,000 2,000,000 0 Billings during the year 1,200,000 800,000 1,000,000 2,500,000 Cash collections during the year 1,000,000 1,000,000 1,100,000 2,400,000 Scenario1 Assume that McCombs uses the percentage of completion method for revenue recognition Required Compute the amount of gross profit recognized for each year from 2008 through 2011 Required Prepare all journal entries to record costs, billings, collections, and profit recognition for 2008 Required Calculate and provide the balance sheet amount (properly classified and labeled) for each December 31 from 2008 through 2011 Scenario 2 Assume that McCombs uses the completed contract method for revenue recognition Required Compute the amount of gross profit recognized by McCombs during each year from 2008 through 2011

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McCombs Contractors received a contract to construct a mental health facility for $2,500,000. Construction was begun in 2008 and completed in 2011. In 2010 McCombs

McCombs Contractors received a contract to construct a mental health facility for $2,500,000. Construction was begun in 2008 and completed in 2011. In 2010 McCombs successfully negotiated a contract change order of $3,000,000. Cost and other data are presented below: Costs incurred during the year 2008 2009 2010 2011 $1,000,000 $1,100,000 $1,200,000 $1,000,000 Estimated costs to complete 1,200,000 1,000,000 2,000,000 0 Billings during the year 1,200,000 800,000 1,000,000 2,500,000 Cash collections during the year 1,000,000 1,000,000 1,100,000 2,400,000 Scenario1 - Assume that McCombs uses the percentage-of-completion method for revenue recognition. Required: Compute the amount of gross profit recognized for each year from 2008 through 2011. Required: Prepare all journal entries to record costs, billings, collections, and profit recognition for 2008 Required: Calculate and provide the balance sheet amount (properly classified and labeled) for each December 31 from 2008 through 2011. Scenario 2 - Assume that McCombs uses the completed contract method for revenue recognition. Required: Compute the amount of gross profit recognized by McCombs during each year from 2008 through 2011. image text in transcribed

McCombs Contractors received a contract to construct a mental health facility for $2,500,000. Construction was begun in 2008 and completed in 2011. In 2010 McCombs successfully negotiated a contract change order of $3,000,000. Cost and other data are presented below: 2008 2009 2010 2011 Costs incurred during the year $1,000,000 $1,100,000 $1,200,000 $1,000,000 Estimated costs to complete 1,200,000 1,000,000 2,000,000 0 Billings during the year 1,200,000 800,000 1,000,000 2,500,000 Cash collections during the year 1,000,000 1,000,000 1,100,000 2,400,000 Scenario1 - Assume that McCombs uses the percentage-of-completion method for revenue recognition. Required: Compute the amount of gross profit recognized for each year from 2008 through 2011. Required: Prepare all journal entries to record costs, billings, collections, and profit recognition for 2008 Required: Calculate and provide the balance sheet amount (properly classified and labeled) for each December 31 from 2008 through 2011. Scenario 2 - Assume that McCombs uses the completed contract method for revenue recognition. Required: Compute the amount of gross profit recognized by McCombs during each year from 2008 through 2011