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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.

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 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.
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.
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