In 20Y5, Duncan Construction Company agreed to construct an apartment building at a price of$1,200,000. The information relating to the costs and billings for the contract is shown below.Cost incurred to dateEst. cost yet to be incurredCustomer billings to dateCollections of billings to date20Y5$ 280,000520,000150,000120,000●20Y6$ 600,000200,000500,000320,00020Y7$ 785,00001,200,000940,000• Prepare a schedule showing the profit to be recognized each year.Prepare all journal entries required for all years using the percentage of completion method.Prepare all journal entries required for all years using the completed contracts method.

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Prepare a schedule showing the profit to be recognized each year. Prepare all journal entries required for all years using the percentage of completion method. Prepare all journal entries required for all years using the completed contracts method.

Prepare a schedule showing the profit to be recognized each year. Prepare all journal entries required for all years using the percentage of completion method. Prepare all journal entries required for all years using the completed contracts method.

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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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

In 20Y5, Duncan Construction Company agreed to construct an apartment building at a price of
$1,200,000. The information relating to the costs and billings for the contract is shown below.
Cost incurred to date
Est. cost yet to be incurred
Customer billings to date
Collections of billings to date
20Y5
$ 280,000
520,000
150,000
120,000
●
20Y6
$ 600,000
200,000
500,000
320,000
20Y7
$ 785,000
0
1,200,000
940,000
• Prepare a schedule showing the profit to be recognized each year.
Prepare all journal entries required for all years using the percentage of completion method.
Prepare all journal entries required for all years using the completed contracts method.

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