Sloane Company contracted on 4/1/03 to construct a building for $2,700,000. The project was completed in 2005. Additional data follow:
2003 2004 2005
Costs incurred to date $ 600,000 $1,200,000 $1,860,000
Estimated cost to complete 1,000,000 600,000 ?
Billings to date 500,000 1,900,000 2,700,000
Collections to date 400,000 1,400,000 2,350,000
(a) Calculate the income recognized by Sloane under the percentage-of-completion method of accounting in each of the years 2003, 2004, and 2005.
(b) Prepare all necessary entries for the year 2004.
(c) Present the balance sheet disclosures at December 31, 2004. Proper headings or subheadings must be indicated.
The solution examines long term contracts and percentage-of-completion methods for accounting. The present balance sheet disclosures are determined.