On February 1, 2020, Mar Contractors agreed to construct a building at a contract price of $15,400,000. Mar initially estimated total construction costs would be $12,000,000 and the project would be finished in 2023. Information relating to the costs and billings for this contract during 2020-2022 is as follows: 2020 2021 2022 Total costs incurred during the year 4,500,000 5,300,000 4,000,000 Estimated costs to complete 7,500,000 4,200,000 1,800,000 Customer billings to date 6,600,000 12,000,000 13,800,000 Collections to date 6,000,000 10,500,000 13,500,000 Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract and all the necessary journal entries for the years ended December 31, 2020, 2021, and 2022. Using the cost-recovery method, prepare schedules to compute the profit or loss to be recognized as a result of this contract all the necessary journal entries to record the costs, expenses and revenue for the years ended December 31, 2020, 2021, and 2022. (Journal entries for billings and collection are not required.)
On February 1, 2020, Mar Contractors agreed to construct a building at a contract price of $15,400,000. Mar initially estimated total construction costs would be $12,000,000 and the project would be finished in 2023. Information relating to the costs and billings for this contract during 2020-2022 is as follows:
2020 2021 2022
Total costs incurred during the year 4,500,000 5,300,000 4,000,000
Estimated costs to complete 7,500,000 4,200,000 1,800,000
Customer billings to date 6,600,000 12,000,000 13,800,000
Collections to date 6,000,000 10,500,000 13,500,000
- Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract and all the necessary
journal entries for the years ended December 31, 2020, 2021, and 2022. - Using the cost-recovery method, prepare schedules to compute the profit or loss to be recognized as a result of this contract all the necessary journal entries to record the costs, expenses and revenue for the years ended December 31, 2020, 2021, and 2022. (Journal entries for billings and collection are not required.)
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