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 ...........
2. Gross profit recognized during the year ......
3. Balance in the construction in progress account at December 31 (after closing entries) ............
4. Balance in the progress billings account at December 31 (after closing entries) ..............

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 ...........
2. Gross profit recognized during the year ......
3. Balance in the construction in progress account at December 31 (after closing entries) ............
4. Balance in the progress billings account at December 31 (after closing entries) ..............