Compute the gross profit or loss recognized

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Problem - Long-Term Contracts - Koolman Construction Company began work on a contract in 2019. The contract price is $3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows:

 

2019

2020

Costs incurred during the year

$600,000

$700,000

Estimated costs to complete, December 31

1,400,000

1,200,000

Billings during the year

500,000

850,000

Collections during the year

400,000

800,000

Required -

1. Compute the gross profit or loss recognized in 2019 and 2020.

2. Prepare the appropriate sections of the income statement and ending balance sheet for each year.

Reference no: EM132890195

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