Accounting: Gross Profit And Journal Entries
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In 2012, Gurney Construction Company agrees to construct an apartment building at a price of $1,200,000. The information relating to the costs and buildings for the contract shown below:
Costs 2012 2013 2014
Costs incurred to date $280,000 $600,000 $785,000
Estmated costs yet incurred 520,000 200,000 0
Customer billings to date 150,000 500,000 1,200,000
collection to billings to date 120,000 320,000 940,000
(a) Assuming that the percentage of competition method is used:
1. Compute the amount of gross profit to be recognized in 2012 and 2013
2. Prepare g=f journal entries for 2013
(b) For 2013 show the detail related to this construction contract would be disclosed on the balance sheet and on the income statement.
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Solution Summary
The solution gives detailed steps on computing the gross profit for a specifc question and then preparing a journey entry. All formula and calculations are shown and explained.
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