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    Recognition of Revenue on Long-Term Contract and Entries

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    Amy Van Dyken Construction
    Company uses the percentage-of-completion method of accounting. In 2007, Van Dyken began work under
    contract #E2-D2, which provided for a contract price of $2,200,000. Other details follow:
    2007 2008
    Costs incurred during the year $ 480,000 $1,425,000
    Estimated costs to complete, as of December 31 1,120,000 -0-
    Billings during the year 420,000 1,680,000
    Collections during the year 350,000 1,500,000

    Instructions
    (a) What portion of the total contract price would be recognized as revenue in 2007? In 2008?
    (b) Assuming the same facts as those above except that Van Dyken uses the completed-contract
    method of accounting, what portion of the total contract price would be recognized as revenue
    in 2008?
    (c) Prepare a complete set of journal entries for 2007 (using the percentage-of-completion method).

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    https://brainmass.com/business/business-law/recognition-revenue-long-term-contract-entries-313453

    Solution Summary

    The solution recognizes revenue on long-term contracts and prepares entries.

    $2.19

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