Question
Waterway Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will
Waterway Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $596,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $894,000. The following data pertain to the construction period.
2020 | 2021 | 2022 | ||||
Costs to date | $274,160 | $417,200 | $607,000 | |||
Estimated costs to complete | 321,840 | 178,800 | 0 | |||
Progress billings to date | 272,000 | 550,000 | 894,000 | |||
Cash collected to date | 242,000 | 500,000 | 894,000 |
(a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.
Gross profit recognized in 2020 | $ | |
Gross profit recognized in 2021 | $ | |
Gross profit recognized in 2022 | $ |
(b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.
Gross profit recognized in 2020 | $ | |
Gross profit recognized in 2021 | $ | |
Gross profit recognized in 2022 | $ |
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