Use percentage of completion method to compute revenue
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12. Howard Construction Co. contracted to build a bridge for $3,000,000.
Construction began in 2004 and was completed in 2005. Data relating
to the construction are:
2004 2005
???????? ????????
Costs incurred $990,000 $825,000
Estimated costs to complete 810,000 ??
Howard uses the percentage-of-completion method.
INSTRUCTIONS
(a) How much revenue should be reported for 2004? Show your
computation.
(b) Make the entry to record progress billings of $1,000,000 during
2004.
(c) Make the entry to record the revenue and gross profit for 2004.
(d) How much gross profit should be reported for 2005? Show your
computation.
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Solution Summary
The solution uses the percentage of completion method to compute revenues for Howard Construction Co.
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