Problem 3

Calamity Construction has the following information regarding a recent project:

Sales price: $ 17,600,000

Costs incurred: $ 2,400,000 in 2014; $ 5,025,000 in 2015; $ 6,815,000 in 2016;

$ 3,885,000 in 2017

Estimated total cost: $ 16,000,000 in 2014; $ 16,500,000 in 2015; $ 17,800 in 2016;

$ 18,125,000 in 2017

Billings: $ 5,000,000 in 2014; $ 7,000,000 in 2015; $ 4,000,000 in 2016, $ 1,600,000 in 2017

Cash collections: $ 4,600,000 in 2014; $ 5,800,000 in 2015; $ 5,100,000 in 2016,

$ 2,100,000 in 2017

Presume the project qualifies for revenue recognition over time.(HINT: Prepare all journal entries, T-accounts and compute annual balances.)

What amount of gross profit was recognized in 2014, 2015, 2016, and 2017?

What account(s) and amount(s) would be reported on the 12/31/16 balance sheet?

What account(s) and amount(s) would be reported in the 12/31/17 income statement?

Presume the project does not qualify for revenue recognition over time.What amount of gross profit was recognized in 2014, 2015, 2016, and 2017?