During 2020, Tamarisk Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $405,900 $766,500 $1,076,000 Estimated costs to complete 584,100 328,500 -0- Billings to date 300,000 893,000 1,610,000 Collections to date 267,000 809,000 1,435,000 (a) Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.
During 2020, Tamarisk Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $405,900 $766,500 $1,076,000 Estimated costs to complete 584,100 328,500 -0- Billings to date 300,000 893,000 1,610,000 Collections to date 267,000 809,000 1,435,000 (a) Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Construction Job Cost Analysis**
In 2020, Tamarisk Company embarked on a construction project with a contract value of $1,610,000. The project reached completion in 2022. The provided data summarizes the actual costs, estimated future costs, billings, and collections over the three-year period.
### Data Summary:
| Year | Costs Incurred to Date | Estimated Costs to Complete | Billings to Date | Collections to Date |
|--------|------------------------|-----------------------------|------------------|---------------------|
| 2020 | $405,900 | $584,100 | $300,000 | $267,000 |
| 2021 | $766,500 | $328,500 | $893,000 | $809,000 |
| 2022 | $1,076,000 | $0 | $1,610,000 | $1,435,000 |
### Task:
Using the percentage-of-completion method, compute the gross profit to be recognized for each year.
### Input Fields for Calculations:
- **Gross profit recognized in 2020:** $ __________
- **Gross profit recognized in 2021:** $ __________
- **Gross profit recognized in 2022:** $ __________
### Notes:
1. The percentage-of-completion method involves calculating the proportion of work completed each year based on the costs incurred to date divided by the total expected costs.
2. Once the percentage of completion is determined for each year, apply this percentage to the total contract price to find the revenue recognized each year.
3. Subtract the costs incurred to date from the recognized revenue to determine the gross profit for each year.
Please enter your calculations into the provided fields. You have unlimited attempts to submit your answers.
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