The board of directors of Tamarisk 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 Tamarisk's controller in the preparation of a presentation to be given at the board meeting. The controller provides you with the following information: | 1. | | Tamarisk 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 | | $ 504,000 | | $ 344,000 | | $ 314,000 | | $ 428,000 | | $ 105,000 | | | | B | | 724,000 | | 214,000 | | 214,000 | | 201,000 | | 469,000 | | | | C | | 477,000 | | 479,000 | | 394,000 | | 354,000 | | -0- | | | | D | | 202,000 | | 104,000 | | 67,000 | | 127,000 | | 101,000 | | | | E | | 454,000 | | 404,000 | | 404,000 | | 324,000 | | 81,000 | | | | | | $2,361,000 | | $1,545,000 | | $1,393,000 | | $1,434,000 | | $756,000 | | | | | | | | | | | | | | | | 3. | | Each contract is with a different customer. | | 4. | | Any work remaining to be done on the contracts is expected to be completed in 2022. | | | | |
