How much gross profit should be reported

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Question - Jets Ltd. contracted to build a high-rise for $ 6,000,000. Construction began in 2020 and is expected to be completed in 2020. Data for 2020 and 2021 are:

 

2020

2021

Costs incurred

$900,000

$1,700,000

Estimated costs to complete

3,600,000

2,400,000

Instructions - Using the percentage-of-completion method and the cost-to-cost basis,

a) How much gross profit should be reported for 2020? Show your calculation.

b) How much gross profit should be reported for 2021? Show your calculation.

c) Prepare the journal entry to record the revenue and gross profit for 2021.

Reference no: EM132550213

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