On March 1, 2012, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000. The following information pertains to the construction period. Compute the amount of gross profit to be recognized on year 2014, assuming the percentage-of-completion method is used.
On March 1, 2012, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000. The following information pertains to the construction period. Compute the amount of gross profit to be recognized on year 2014, assuming the percentage-of-completion method is used.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On March 1, 2012, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000. The following information pertains to the construction period.
Compute the amount of gross profit to be recognized on year 2014, assuming the percentage-of-completion method is used.
Transcribed Image Text:2012
2013
2014
$ 600,000
1,400,000
1,050,000
950,000
$1,560,000
520,000
2,000,000
1,950,000
Costs to date
$2,100,000
Estimated costs to complete
Progress billings to date
-0-
3,000,000
2,850,000
Cash collected to date
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