Reference no: EM133000814

Shining 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 $800,000 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.

                                                      2020.                  2021                2022

Costs to date                         $270,000            $450,000      $600,000

Estimated costs to complete        330,000          250,000             -0-

Progress billings to date               270,000            550,000            900,000

Cash collected to date                   240,000           500,000               900,000

Instructions

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

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