Recognition of profit on long-term contracts

Assignment Help Accounting Basics

Reference no: EM13765337

(Recognition of Profit on Long-Term Contracts)

During 2014 AFCO started a construction job with a contract price of $2,500,000. The job was completed in 2016. The following information is available.

2014 2015 2016

Costs incurred to date $ 600,000 $1,435,000 $2,100,000

Estimated costs to complete 1,400,000 615,000 -0-

Billings to date 100,000 500,000 2,500,000

Collections to date 100,000 300,000 2,000,000

Instructions

(a) Compute the amount of gross profit to be recognized each year assuming the percentage-ofcompletion method is used.

(b) Prepare all necessary journal entries for 2015.

Reference no: EM13765337

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