Explore BrainMass

Explore BrainMass

    Percentage of completion method

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. On March 1, 2007, Winter 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.
    2004 2005 2006
    Costs incurred to date $600,000 $1,560,000 $2,100,000
    Estimated costs to complete 1,400,000 390,000 -0-
    Billings to date 1,050,000 2,100,000 3,000,000
    Collections to date 950,000 1,950,000 2,750,000

    Instructions

    (a) Compute the amount of gross profit to be recognized each year assuming the percentage-of completion method is used.
    (b) Prepare all necessary journal entries for 2005.
    (c) Compute the amount of gross profit to be recognized each year assuming the completed-contract method is used

    © BrainMass Inc. brainmass.com June 3, 2020, 11:12 pm ad1c9bdddf
    https://brainmass.com/business/accounting/percentage-of-completion-method-268867

    Solution Summary

    The solution explains how to calculate the amount of gross profit using the percentage of completion method

    $2.19

    ADVERTISEMENT