Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2020, Hamilton began work under contract #E2-D2, which provided for a contract price of $2,200,000. Other details follow: 2020 2021 Costs incurred during the year $640,000 $1,425,000 Estimated costs to complete, as of December 31 960,000 –0– Billings during the year 420,000 1,680,000 Collections during the year 350,000 1,500,000 Instructions a. What portion of the total contract price would be recognized as revenue in 2020? In 2021? b. Assuming the same facts as those above except that Hamilton uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2021? c. Prepare a complete set of journal entries for 2020 (using the percentage-of-completion method).
Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2020, Hamilton began work under contract #E2-D2, which provided for a contract price of $2,200,000. Other details follow: 2020 2021 Costs incurred during the year $640,000 $1,425,000 Estimated costs to complete, as of December 31 960,000 –0– Billings during the year 420,000 1,680,000 Collections during the year 350,000 1,500,000 Instructions a. What portion of the total contract price would be recognized as revenue in 2020? In 2021? b. Assuming the same facts as those above except that Hamilton uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2021? c. Prepare a complete set of journal entries for 2020 (using the percentage-of-completion method).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2020, Hamilton began work under contract #E2-D2, which provided for a contract price of $2,200,000. Other details follow:
|
2020
|
2021
|
|
|
Costs incurred during the year
|
$640,000
|
$1,425,000
|
|
Estimated costs to complete, as of December 31
|
960,000
|
–0–
|
|
Billings during the year
|
420,000
|
1,680,000
|
|
Collections during the year
|
350,000
|
1,500,000
|
Instructions
a. What portion of the total contract price would be recognized as revenue in 2020? In 2021?
b. Assuming the same facts as those above except that Hamilton uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2021?
c. Prepare a complete set of
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