During 2020, Huskies Together Company started a construction job with a contract price of $1,600,000. The job was completed in 2022. The following information is available.202020212022Costs incurred$400,000$425,000$245,000Estimated costs to complete600,000275,000-0-Billings to date300,000900,0001,600,000Collections to date270,000810,0001,425,000a. Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.b. Prepare all necessary journal entries for 2021, assuming the percentage-of-completion method is used.C. Assuming that the estimated costs to complete the contract on 12/31/2021 is revised to $800,000, using the completed-contract method, compute the revenue and gross profit or loss to berecognized as a result of this contract for the years ended December 31, 2020, 2021. (Ignore income taxes.)

Gross profit recognized in 2020 Contract price=$1,600,000 Costs incurred= $400,000 +$600,000…

2020 2021 2022 Costs incurred $400,000 $425,000 $245,000 Estimated costs to complete 600,000 275,000 -0- Billings to date 300,000 900,000 1,600,00 Collections to date 270,000 810,000 1,425,00 a. Compute the amount of gross profit to be recognized each year, assum b. Prepare all necessary journal entries for 2021, assuming the percentag

2020 2021 2022 Costs incurred $400,000 $425,000 $245,000 Estimated costs to complete 600,000 275,000 -0- Billings to date 300,000 900,000 1,600,00 Collections to date 270,000 810,000 1,425,00 a. Compute the amount of gross profit to be recognized each year, assum b. Prepare all necessary journal entries for 2021, assuming the percentag

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

During 2020, Huskies Together Company started a construction job with a contract price of $1,600,000. The job was completed in 2022. The following information is available.
2020
2021
2022
Costs incurred
$400,000
$425,000
$245,000
Estimated costs to complete
600,000
275,000
-0-
Billings to date
300,000
900,000
1,600,000
Collections to date
270,000
810,000
1,425,000
a. Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.
b. Prepare all necessary journal entries for 2021, assuming the percentage-of-completion method is used.
C. Assuming that the estimated costs to complete the contract on 12/31/2021 is revised to $800,000, using the completed-contract method, compute the revenue and gross profit or loss to be
recognized as a result of this contract for the years ended December 31, 2020, 2021. (Ignore income taxes.)

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Explain clearly
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