Exercise 18-33 (Recognition of Profit on Long-Term Contracts) During 2022, Nelson Company started a construction job with a contract price of $1,600,000. The job was completed in 2024. The following information is available: Contract cost incurred to date Estimated costs to complete Billings to date Collections to date Instructions: 2022 $400,000 600,000 300,000 270,000 2024 2023 $825,000 $1,070,000 275,000 900,000 810,000 1,600,000 1,425,000 (a) Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. 0 (b) Prepare all necessary journal entries for 2023. (c) Compute the amount of gross profit to be recognized each year, assuming the cost- recovery method is used.
Exercise 18-33 (Recognition of Profit on Long-Term Contracts) During 2022, Nelson Company started a construction job with a contract price of $1,600,000. The job was completed in 2024. The following information is available: Contract cost incurred to date Estimated costs to complete Billings to date Collections to date Instructions: 2022 $400,000 600,000 300,000 270,000 2024 2023 $825,000 $1,070,000 275,000 900,000 810,000 1,600,000 1,425,000 (a) Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. 0 (b) Prepare all necessary journal entries for 2023. (c) Compute the amount of gross profit to be recognized each year, assuming the cost- recovery method is used.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Exercise 18-33 (Recognition of Profit on Long-Term Contracts)
During 2022, Nelson Company started a construction job with a contract price of $1,600,000.
The job was completed in 2024. The following information is available:
Contract cost incurred to date
Estimated costs to complete
Billings to date
Collections to date
Instructions:
2022
$400,000
600,000
300,000
270,000
2023
$825,000
275,000
900,000
810,000
2024
$1,070,000
0
1,600,000
1,425,000
(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 cost-
recovery method is used.
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