During 2020, Nilsen 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 to date $400,000 $825,000 $1,070,000 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 Instructions 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. c. Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.
During 2020, Nilsen 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 to date $400,000 $825,000 $1,070,000 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 Instructions 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. c. Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
During 2020, Nilsen 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 to date
|
$400,000
|
$825,000
|
$1,070,000
|
|
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
|
Instructions
a. Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.
b. Prepare all necessary
c. Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.
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