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    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.

    $2.19

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