Calculate the gross profit that should be recognized

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Question - Schreiber Construction Inc. was awarded a contract to build a condominium complex in a suburb of Calgary at a total contract price of $9,990,100.

Schreiber began construction on June 7, 2021. Management of Schreiber estimates that the complex will be finished by August 31, 2023.

The following data pertain to the construction period:

 

2021

2022

2023

Costs for the year

$1,749,000

$1,598,000

$3,283,700

Estimated costs to complete

4,861,100

3,263,100

0

Progress billings for the year

2,497,600

2,671,300

4,821,200

Cash collected during the year

2,250,000

2,651,800

4,089,100

Assume that Schreiber Construction uses the percentage of completion method and the cost-to-cost basis to account for its long-term construction projects.

Required -

1. Calculate the gross profit that should be recognized for the 2021, 2022 and 2023 years.

2. Prepare the journal entries for the 2022 year.

Reference no: EM133090543

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