Deen Construction began a construction project in 2018. The contract price was $1,250,000, and the estimated costs were $1,000,000. Data for each year of the contract are as follows: 2018 2019 2020 Costs incurred during the year $250,000 $600,000 $190,000 Estimated costs to complete 750,000 212,500 -0- Partial billings 375,000 500,000 375,000 Collections 187,500 469,000 593,500 Instructions: 1. Assuming Deen the percentage of completion method: (a) Prepare a schedule that computes the gross profit for 2018 - 2020 (b) Determine the net amount for construction in progress inventory should be reported on the 2018 balance sheet. (c) Prepare all the necessary journal entries for 2019 2. Compute the amount of gross profit to be recognized each year, assuming the completed contract method is used.
Deen Construction began a construction project in 2018. The contract price was $1,250,000, and the
estimated costs were $1,000,000. Data for each year of the contract are as follows:
2018 2019 2020
Costs incurred during the year $250,000 $600,000 $190,000
Estimated costs to complete 750,000 212,500 -0-
Partial billings 375,000 500,000 375,000
Collections 187,500 469,000 593,500
Instructions:
1. Assuming Deen the percentage of completion method:
(a) Prepare a schedule that computes the gross profit for 2018 - 2020
(b) Determine the net amount for construction in progress inventory should be reported on the
2018
(c) Prepare all the necessary
2. Compute the amount of gross profit to be recognized each year, assuming the completed contract
method is used.
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