On February 1, 2023, Ivanhoe Contractors agreed to construct a building at a contract price of $5,840,000. Ivanhoe estimated total construction costs would be $4,032,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and cost-recovery accounting, show the gross profit that should be reported for 2023, 2024, and 2025. 2024 2023 2024 $1,512,000 $2,664,000 2,520,000 1,776,000 2,240,000 4,032,000 2,040,000 3,540,000 2025 Percentage-of-Completion Gross Profit 2023 2024 2025 2025 $4,620,000 -0- 5,640,000 5,540,000 LA Cost-Recovery Gross Profit

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Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.