Question
VI. Long-term Contracts On January 1, 2015, Cleveland Enterprises obtained a contract to construct a building. It was estimated at the beginning of the contract
VI. Long-term Contracts
On January 1, 2015, Cleveland Enterprises obtained a contract to construct a building. It was estimated at the beginning of the contract that it would take three years to complete the project at an expected cost of $200,000. The contract price was $250,000. The following information describes the status of the job at the close of production each year:
| 2015 | 2016 | 2017 |
Actual costs incurred ........... | $100,800 | $129,200 | $15,000 |
Estimated costs to complete ..... | 109,200 | 20,000 | 0 |
Billings on contract ............ | 125,000 | 125,000 | 0 |
Collections on contract ......... | 120,000 | 120,000 | 10,000 |
Required:
1. Compute the items listed below for each year assuming the use of the percentage-of-completion cost-to-cost method. (Round all percentages to two decimals).
| 2015 | 2016 | 2017 |
1. Revenue recognized during the year ........... |
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2. Gross profit recognized during the year ...... |
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3. Balance in the construction in progress account at December 31 (after closing entries) ............ |
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4. Balance in the progress billings account at December 31 (after closing entries) .............. |
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2. Compute the items listed below for each year assuming the use of completed contract method.
| 2015 | 2016 | 2017 |
1. Revenue recognized during the year ........... |
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2. Gross profit recognized during the year ...... |
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3. Balance in the construction in progress account at December 31 (after closing entries) ............ |
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4. Balance in the progress billings account at December 31 (after closing entries) .............. |
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