P18-3 (Recognition of Profit and Entries on Long-Term Contract) On March 1, 2014, Chance Company entered
into a contract to build an apartment building. It is estimated that the building will cost						$2,000,000	and will take 3 years
to complete. The contract price was			$3,000,000	The following information pertains to the construction period.
			2014	2015	2016
Costs to date:			$600,000	$1,560,000	$2,100,000
Estimated costs to complete:			1,400,000	520,000	0
Progress billing to date:			1,050,000	2,000,000	3,000,000
Cash collected to date:			950,000	1,950,000	2,850,000
Instructions:
(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.
Gross profit recognized in:
			2014		2015		2016
Contract price				Amount		Amount		Amount
Costs:
Costs to date			Amount		Amount		Amount
Estimated costs to complete			Amount	Formula	Amount	Formula		Formula
Total estimated profit				Formula		Formula		Formula
Percentage completed to date				Formula		Formula		Formula
Total gross profit recognized				Formula		Formula		Formula
Less: GP recognized in previous years				Amount		Formula		Formula
Gross profit recognized in current year				Formula		Formula		Formula
(b) Prepare all necessary journal entries for 2016.
	Account Title					Amount
	Account Title						Amount
	Accounts Receivable					Amount
	Account Title						Amount
	Account Title					Amount
	Account Title						Amount
	Account Title					Amount
	Account Title					Amount
	Account Title						Amount
	Account Title					Amount
	Account Title						Amount
(c) Prepare a partial balance sheet for December 31, 2015, showing the balances in the receivables and inventory accounts.
	CHANCE COMPANY
	Balance Sheet (Partial)
	December 31, 2015
	Current assets:
	Title					Amount
	Inventories
	Title				Amount
	Less: Title				Amount
	Costs and recognized gross profit in excess of billings					Formula