Compute the estimated gross profit

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Question - Evans Construction Company has entered into a contract beginning January 1, 2018, to build a parking complex. It has been estimated that the complex will cost $600,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $900,000. The following data pertain to the construction period.

 

2018

2019

2020

Costs to date

270,000

450,000

610,000

Estimated costs to complete

330,000

150,000

0

Progress billings to date

270,000

550,000

900,000

Cash collected to date

240,000

500,000

900,000

Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.

Do the complete set of journal entries for 2018 and 2019, assuming all costs are on account (using the percentage-of-completion method).

Reference no: EM132524020

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