During 2022 Fat Cat Construction started a construction job with a contract price of $2,500,000. The job was completed in 2024. The following information is available. 2022 2023 2024 Costs incurred to date $600,000 $1,435,000 $2,100,000 Estimated costs to complete 1,400,000 615,000 -0- Billings to date 100,000 500,000 2,500,000 Collections to date 100,000 300,000 2,000,000 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 2023. (c) Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.
During 2022 Fat Cat Construction started a construction job with a contract price of $2,500,000. The job was completed in 2024. The following information is available. 2022 2023 2024 Costs incurred to date $600,000 $1,435,000 $2,100,000 Estimated costs to complete 1,400,000 615,000 -0- Billings to date 100,000 500,000 2,500,000 Collections to date 100,000 300,000 2,000,000 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 2023. (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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4.) During 2022 Fat Cat Construction started a construction job with a contract price of $2,500,000. The job was completed in 2024. The following information is available.
|
|
2022 |
2023 |
2024 |
|
Costs incurred to date |
$600,000 |
$1,435,000 |
$2,100,000 |
|
Estimated costs to complete |
1,400,000 |
615,000 |
-0- |
|
Billings to date |
100,000 |
500,000 |
2,500,000 |
|
Collections to date |
100,000 |
300,000 |
2,000,000 |
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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