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 $
mujionostevoE18-12B (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
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