Question
***PLEASE EXPLAIN YOUR ANSWERS*** Question 8 : Springer Construction Company contracted to construct a factory building for Douglas Manufacturing Inc. for a total contract price
***PLEASE EXPLAIN YOUR ANSWERS***
Question 8:
Springer Construction Company contracted to construct a factory building for Douglas Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by October 31, 2018. The annual contract costs incurred, estimated costs to complete the contract and the accumulated billings to Douglas for 2016, 2017, and 2018 are given below:
| 2016 | 2017 | 2018 | |
| Costs Incurred to date | 2,880,000 | 6,100,000 | 7,200,000 |
| Estimated costs to complete the contract | 4,320,000 | 1,100,000 | - |
| Billings to Douglas during year | 3,200,000 | 3,500,000 | 1,700,000 |
- (6 points) Using the percentage of completion method of revenue recognition, how much gross profit or loss will be recognized in 2017?
- (2 points) Using the completed contract method of revenue recognition, how much gross profit or loss will be recognized in 2017?
- (4 points) Make the journal entry to record the income (loss) for 2017 on Springer 's books.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Security And Loss Prevention An Introduction
Authors: Philip Purpura CPP Florence Darlington Technical College
7th Edition
0128117958, 9780128117958
