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.
(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract method is used.
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Database developer for a local college
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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.
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