E18-12B (Recognition of Profit on Long-Term Contracts)During 2014 AFCO started a construction job with a contract price of $2,500,000. The job was completed in 2016. The following information is available. 2014 2015 2016 Costs incurred to date $ 600,000 $

profilemujionostevo
 (Not rated)
 (Not rated)
Chat

E18-12B (Recognition of Profit on Long-Term Contracts)During 2014 AFCO started a construction job with a contract price of $2,500,000. The job was completed in 2016. The following information is available.

                                                             2014                   2015                    2016

Costs incurred to date                      $ 600,000          $1,435,000          $2,100,000

Estimated costs to complete            1,400,000                615,000                 –0–

Billings to date                                     100,000               500,000           2,500,000

Collections to date                              100,000                300,000           2,000,000

Instructions

(a) Compute the amount of gross profit to be recognized each year assuming the percentage-ofcompletion method is used.

(b) Prepare all necessary journal entries for 2015.

(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract method is used.

    • 9 years ago
    correct answer
    NOT RATED

    Purchase the answer to view it

    blurred-text
    • attachment
      12_ll.docx