On March 1, 2019, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by November 30, 2021. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2019, 2020 and 2021 are given below. 2019 2020 2021 Contract costs incurred during the year $2,880,000 $2,595,000 $1,825,000| Estimated costs to complete the contract at 12/31 3,520,000 1,825,000 -0- Billings to Fabrik during the year 3,200,000 4,000,000 1,200,000| Cash collected during the year 2,500,000 4,000,000 1,900,000| Instructions a. Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract and all the necessary journal entries for the years ended December 31, 2019, 2020, and 2021.

On March 1, 2019, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by November 30, 2021. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2019, 2020 and 2021 are given below. 2019 2020 2021 Contract costs incurred during the year $2,880,000 $2,595,000 $1,825,000| Estimated costs to complete the contract at 12/31 3,520,000 1,825,000 -0- Billings to Fabrik during the year 3,200,000 4,000,000 1,200,000| Cash collected during the year 2,500,000 4,000,000 1,900,000| Instructions a. Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract and all the necessary journal entries for the years ended December 31, 2019, 2020, and 2021.

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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