Calculate the revenues to be recognized for the years

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Question - Assume that GIG Company has contracted to build an office building for Middle Company for $4,800,000. Middle Company has title to the office building during the entire construction period. The construction costs were estimated initially to be $3,680,000. Other relevant data is as follows:

 

2017

2018

2019

Current period costs

$1,472,000

$1,856,000

$820,000

Estimated additional costs to complete

2,208,000

832,000

0

Progress billings

1,000,000

1,500,000

2,300,000

Collection on billings-current year

725,000

1,000,000

3,075,000

Additional information: Contract price remained unchanged throughout the construction.

Required - Calculate the revenues to be recognized for the years 2017 and 2018 assuming GIG Company uses the percentage of completion method. Calculate the percentage, complete rounding to the nearest whole percent.

Prepare journal entries for GIG Company for 2017 using the percentage of completion method.

Reference no: EM133074982

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