Compute the estimated gross profit

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Question - Headland Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $606,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $896,000. The following data pertain to the construction period.

 

2020

2021

2022

Costs to date

$266,640

$412,080

$617,000

Estimated costs to complete

339,360

193,920

-0-

Progress billings to date

270,000

545,000

896,000

Cash collected to date

240,000

495,000

896,000

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

(b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.

Reference no: EM133057907

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