Compute the estimated gross profit that would be recognized

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Reference no: EM131068517

Shanahan Construction Company has entered into a contract beginning January 1, 2014, 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.

 

2014

2015

2016

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 

Instructions

(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: EM131068517

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