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On June 1, 2019, Al-Bader Construction Company contracted to construct a building for Nass Company, for a lotal contract price of $120,000 completed by October 31, 2021 The annual costs incurred, estimated costs to comploto the contract, billings to Nass and collections for 2019, 2020, and 2021 are given below project was to 2019 2020 2021 Costs incurred to date $4,320,000 $7,065,000 $10.950,000 Estimated costs to complete 5,280,000 3,285,000 0 Billings to date 4,800,000 10,050,000 12,000,000 Collections to date 3,000,000 3,250,000 9,750,000 Instructions: If Al-Bader Company uses the percentage-of-completion method; 1 Compute the amount of gross profit or loss to be recognized each year 2 Prepare all necessary journal entries for 2020. 3 Prepare the journal entry to record the completion of the contract in 2021 4 Prepare partial statement of financial position at December 31, 2019 5 Al-Bader Company uses the cost-recovery method, prepare the necessary journal entry to recognize any gross profit in 2021.

On June 1, 2019, Al-Bader Construction Company contracted to construct a building for Nass Company, for a lotal contract price of $120,000 completed by October 31, 2021 The annual costs incurred, estimated costs to comploto the contract, billings to Nass and collections for 2019, 2020, and 2021 are given below project was to 2019 2020 2021 Costs incurred to date $4,320,000 $7,065,000 $10.950,000 Estimated costs to complete 5,280,000 3,285,000 0 Billings to date 4,800,000 10,050,000 12,000,000 Collections to date 3,000,000 3,250,000 9,750,000 Instructions: If Al-Bader Company uses the percentage-of-completion method; 1 Compute the amount of gross profit or loss to be recognized each year 2 Prepare all necessary journal entries for 2020. 3 Prepare the journal entry to record the completion of the contract in 2021 4 Prepare partial statement of financial position at December 31, 2019 5 Al-Bader Company uses the cost-recovery method, prepare the necessary journal entry to recognize any gross profit in 2021.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On June 1, 2019, Al-Bader Construction Company contracted to construct a building for Nass Company, for a total contract price of $12,600,000 The project was to be completed by October 31, 2021 The annual costs incurred, estimated costs to complete the contract, billings to Nass and collections for 2019, 2020, and 2021 are given below 2019 2020 2021 Costs incurred to date $4,320,000 $7,665,000 $10,950,000 Estimated costs to complete 5,280,000 3,285,000 0 Billings to date 4,800,000 10,050,000 12,000,000 Collections to date 3,000,000 3,250,000 9,750,000 Instructions: If Al-Bader Company uses the percentage-of-completion method; 1 Compute the amount of gross profit or loss to be recognized each year 2. Prepare all necessary journal entries for 2020 3 Prepare the journal entry to record the completion of the contract in 2021 4. Prepare partial statement of financial position at December 31, 2019 5 If Al-Bader Company uses the cost-recovery method, prepare the necessary journal entry to recognize any gross profit in 2021.
Transcribed Image Text:On June 1, 2019, Al-Bader Construction Company contracted to construct a building for Nass Company, for a total contract price of $12,600,000 The project was to be completed by October 31, 2021 The annual costs incurred, estimated costs to complete the contract, billings to Nass and collections for 2019, 2020, and 2021 are given below 2019 2020 2021 Costs incurred to date $4,320,000 $7,665,000 $10,950,000 Estimated costs to complete 5,280,000 3,285,000 0 Billings to date 4,800,000 10,050,000 12,000,000 Collections to date 3,000,000 3,250,000 9,750,000 Instructions: If Al-Bader Company uses the percentage-of-completion method; 1 Compute the amount of gross profit or loss to be recognized each year 2. Prepare all necessary journal entries for 2020 3 Prepare the journal entry to record the completion of the contract in 2021 4. Prepare partial statement of financial position at December 31, 2019 5 If Al-Bader Company uses the cost-recovery method, prepare the necessary journal entry to recognize any gross profit in 2021.
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