Cepparo Ltd. entered into a contract on January 1, 2021, to construct a new hotel for a client. The total fixed price for the contract is $35 million. The job was completed in December 2022. Details of the project are as follows: 2021 2022 $20,000,000 $11,000,000 Costs incurred in the period Estimated costs to complete the project 10,000,000 Customer billings in the period Cash collected in the period 18,000,000 17,000,000 17,000,000 15,000,000 Required: Calculate the amount of gross profit to be recognized each year using the percentage- of-completion method and prepare all the required journal entries for both years.
Cepparo Ltd. entered into a contract on January 1, 2021, to construct a new hotel for a client. The total fixed price for the contract is $35 million. The job was completed in December 2022. Details of the project are as follows: 2021 2022 $20,000,000 $11,000,000 Costs incurred in the period Estimated costs to complete the project 10,000,000 Customer billings in the period Cash collected in the period 18,000,000 17,000,000 17,000,000 15,000,000 Required: Calculate the amount of gross profit to be recognized each year using the percentage- of-completion method and prepare all the required journal entries for both years.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Karan
Transcribed Image Text:Cepparo Ltd. entered into a contract on January 1, 2021, to construct a new hotel for a
client. The total fixed price for the contract is $35 million. The job was completed in
December 2022. Details of the project are as follows:
2021
2022
$20,000,000 $11,000,000
Costs incurred in the period
Estimated costs to complete the project 10,000,000
Customer billings in the period
Cash collected in the period
18,000,000 17,000,000
17,000,000 15,000,000
Required:
Calculate the amount of gross profit to be recognized each year using the percentage-
of-completion method and prepare all the required journal entries for both years.
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