Q 6. The board of directors of Essex Multi-Construction Corp. is meeting to choose between the completed-contract method and the percentage-of-completion method of accounting for long-term contracts in the company's financial statements. You have been engaged to assist Essexs controller in the preparation of a presentation to be given at the board meeting. The controller provides you with the following information:

1. Essex commenced doing business on January 1, 2019.

2. Construction activities for the year ended December 31, 2019, were as follows:

Project	Total Contract Price	Contract cost incurred through 31-12-2019	Estimated additional cost to complete contract
A	$615,000	$510,000	$120,000
B	$450,000	$130,000	$260,000
C	$475,000	$350,000	0
D	$600,000	$370,000	$290,000
E	$480,000	$320,000	$80,000
Total:	$2,620,000	$1,680,000	$750,000

3. Each contract is with a different customer.

4. Any work remaining to be done on the contracts is expected to be completed in 2020.

Instructions

a) Prepare a schedule by project, calculating the amount of gross profit (or loss) for the 2019 calendar year, which would be reported under the percentage-of-completion method for each of the project. Show all relevant calculations. Marks: 7

b) Prepare the general journal entry to record revenue and gross profit on project B for 2019, assuming that the percentage-of-completion method is used. Marks: 2