Percentage-of-completion method to account for work

Assignment Help Accounting Basics

Reference no: EM13147322

Meyer Corporation uses the percentage-of-completion method to account for work performed under long-term construction contracts.

Meyer began work under contract #7031-21, which provided for a contract price of $3,600,000. Additional data is as follows:

2008 2009

Costs incurred during the year $ 500,000 $1,664,000

Estimated costs to complete, as of December 31 1,500,000 -0-

Billings during the year 580,000 2,875,000

Collections during the year 525,000 2,670,000

Instructions:

a) What portion of the total contract price would be recognized as revenue in 2008 and in 2009?

b) Prepare a complete set of journal entries for 2008 under the (1) percentage-of-completion method, and (2) completed-contract method.

Reference no: EM13147322

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