Show the balances in the receivables and inventory accounts

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Question: (Recognition of Profit and Entries on Long-Term Contract) On March 1, 2014, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000. The following information pertains to the construction period.

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(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 2016.

(c) Prepare a partial balance sheet for December 31, 2015, showing the balances in the receivables and inventory accounts.

Reference no: EM131592080

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