On March 1, 2014, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,057,000 and will take 3 years to complete. The contract price was $3,500,000. The following information pertains to the construction period: Costs to date 2014 2015 2016 $678,810 $1,444,100 $2,190,000 0 Estimated costs to 1,378,190 618,900 complete Progress billings to 837,000 2,013,000 3,500,000 date Cash collected to 794,000 1,910,000 3,395,000 date Required: Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.
On March 1, 2014, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,057,000 and will take 3 years to complete. The contract price was $3,500,000. The following information pertains to the construction period: Costs to date 2014 2015 2016 $678,810 $1,444,100 $2,190,000 0 Estimated costs to 1,378,190 618,900 complete Progress billings to 837,000 2,013,000 3,500,000 date Cash collected to 794,000 1,910,000 3,395,000 date Required: Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 40P
Related questions
Question
Solve the problem
![On March 1, 2014, Chance Company entered into a
contract to build an apartment building.
It is estimated that the building will cost $2,057,000
and will take 3 years to complete.
The contract price was $3,500,000.
The following information pertains to the construction
period:
Costs to date
2014
2015
2016
$678,810 $1,444,100 $2,190,000
0
Estimated costs to 1,378,190 618,900
complete
Progress billings to 837,000 2,013,000 3,500,000
date
Cash collected to 794,000 1,910,000 3,395,000
date
Required:
Compute the amount of gross profit to be recognized
each year, assuming the percentage-of-completion
method is used.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F32b77943-c3f2-4e7d-9ed3-1b029bcdcf95%2F8f735184-1080-46c3-b644-a5598e677ead%2Ffc1ilmug_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On March 1, 2014, Chance Company entered into a
contract to build an apartment building.
It is estimated that the building will cost $2,057,000
and will take 3 years to complete.
The contract price was $3,500,000.
The following information pertains to the construction
period:
Costs to date
2014
2015
2016
$678,810 $1,444,100 $2,190,000
0
Estimated costs to 1,378,190 618,900
complete
Progress billings to 837,000 2,013,000 3,500,000
date
Cash collected to 794,000 1,910,000 3,395,000
date
Required:
Compute the amount of gross profit to be recognized
each year, assuming the percentage-of-completion
method is used.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning