| The board of directors of Sheridan Construction Company 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 Sheridan's controller in the preparation of a presentation to be given at the board meeting. The controller provides you with the following information: | 1. | | Sheridan commenced doing business on January 1, 2021. | | 2. | | Construction activities for the year ended December 31, 2021, were as follows: | | | | | | | | | | | | | | | | | | Project | | Total Contract Price | | Billings Through 12/31/21 | | Cash Collections Through 12/31/21 | | Contract Costs Incurred Through 12/31/21 | | Estimated Additional Costs to Complete Contracts | | | | A | | $ 495,000 | | $ 335,000 | | $ 305,000 | | $ 419,000 | | $ 96,000 | | | | B | | 715,000 | | 205,000 | | 205,000 | | 187,500 | | 437,500 | | | | C | | 472,500 | | 470,000 | | 385,000 | | 345,000 | | -0- | | | | D | | 197,500 | | 95,000 | | 62,500 | | 118,000 | | 92,000 | | | | E | | 445,000 | | 395,000 | | 395,000 | | 315,000 | | 78,750 | | | | | | $2,325,000 | | $1,500,000 | | $1,352,500 | | $1,384,500 | | $704,250 | | | | | | | | | | | | | | | | 3. | | Each contract is with a different customer. | | 4. | | Any work remaining to be done on the contracts is expected to be completed in 2022. | |
