Inexperienced construction company Flounder Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2,400,000. The work began in early 2020 and Flounder incurred costs of $1,080,000. At December 31, 2020, the estimated future costs to complete the project totalled $1,080,000. During 2021, Flounder ran into trouble with weather conditions and incurred the expected costs of $1,080,000 and estimated that it would need to spend an additional $345,000 to complete the project. During 2022, Flounder reluctantly completed the project, incurring further costs of $375,000. Calculate the amount of gross profit or loss that should be recognized each year under the percentage-of-completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percent complete to 2 decimal places, e.g. 15.25.) Gross profit/(loss) Date December 31, 2020 December 31, 2021 $ 120000 December 31, 2021 $ Prepare the December 31, 2021 year-end journal entry to record costs, revenues, expenses, and losses from the contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round percent complete to 2 decimal places, e.g. 15.25.) December 31, 2022 Account Titles and Explanation $ Debit Credit
Inexperienced construction company Flounder Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2,400,000. The work began in early 2020 and Flounder incurred costs of $1,080,000. At December 31, 2020, the estimated future costs to complete the project totalled $1,080,000. During 2021, Flounder ran into trouble with weather conditions and incurred the expected costs of $1,080,000 and estimated that it would need to spend an additional $345,000 to complete the project. During 2022, Flounder reluctantly completed the project, incurring further costs of $375,000. Calculate the amount of gross profit or loss that should be recognized each year under the percentage-of-completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percent complete to 2 decimal places, e.g. 15.25.) Gross profit/(loss) Date December 31, 2020 December 31, 2021 $ 120000 December 31, 2021 $ Prepare the December 31, 2021 year-end journal entry to record costs, revenues, expenses, and losses from the contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round percent complete to 2 decimal places, e.g. 15.25.) December 31, 2022 Account Titles and Explanation $ Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Inexperienced construction company Flounder Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2,400,000. The work began in early 2020 and
Flounder incurred costs of $1,080,000. At December 31, 2020, the estimated future costs to complete the project totalled $1,080,000. During 2021, Flounder ran into trouble with weather conditions and
incurred the expected costs of $1,080,000 and estimated that it would need to spend an additional $345,000 to complete the project. During 2022, Flounder reluctantly completed the project, incurring
further costs of $375,000.
Calculate the amount of gross profit or loss that should be recognized each year under the percentage-of-completion method. (Enter negative amounts using either a negative sign preceding the number e.g.-45
or parentheses e.g. (45). Round percent complete to 2 decimal places, e.g. 15.25.)
Gross profit/(loss)
Date
December 31, 2020
December 31, 2021
$
120000
December 31, 2021
$
Prepare the December 31, 2021 year-end journal entry to record costs, revenues, expenses, and losses from the contract. (Credit account titles are automatically indented when the amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round percent complete to 2 decimal places, e.g. 15.25.)
December 31, 2022
Account Titles and Explanation
$
Debit
Credit
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