Compute the amount of gross profit recognized

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Problem - Bonobo Builders Company has agreed on a contract price of $4,000,000 to build a hospital. The contract period is 5 years and costs incurred are as follows.

 

2020

2021

2022

2023

2024

Costs incurred in year

100,000

250,000

300,000

200,000

150,000

Estimated costs to complete

850,000

650,000

400,000

200,000

-

Progress billings

200,000

600,000

1,000,000

200,000

2,000,000

Cash collections

150,000

500,000

800,000

200,000

1,500,000

Instructions - Bonobo Builders Company would like you to compute the following amounts for this construction contract.

(1) Compute the amount of gross profit recognized on this contract at the end of year 2023.

(2) Compute the ending balance of accounts receivable at December 31, 2023.

(3) Determine whether the constructions in progress account should be classified as an asset or a liability at December 31, 2023.

Reference no: EM132616824

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