(Recognition of Revenue on Long-Term Contract and Entries) Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2017, Hamilton began work under contract #E2-D2, which provided for a contract price of $2,200,000. Other details follow: 20172018Costs incurred during the year$640,000$1,425,000Estimated costs to complete, as of December 31960,000–0–Billings during the year420,0001,680,000Collections during the year350,0001,500,000Instructions(a) What portion of the total contract price would be recognized as revenue in 2017? In 2018?(b) Assuming the same facts as those above except that Hamilton uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2018?(c) Prepare a complete set of journal entries for 2017 (using the percentage-of-completion method).

(a) Calculation of the amount of income to be recognized in the year of 2014 is given below:

Answered: (Recognition of Revenue on Long-Term…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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(Recognition of Revenue on Long-Term Contract and Entries) Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2017, Hamilton began work under contract #E2-D2, which provided for a contract price of $2,200,000. Other details follow:

	2017	2018
Costs incurred during the year	$640,000	$1,425,000
Estimated costs to complete, as of December 31	960,000	–0–
Billings during the year	420,000	1,680,000
Collections during the year	350,000	1,500,000

Instructions
(a) What portion of the total contract price would be recognized as revenue in 2017? In 2018?
(b) Assuming the same facts as those above except that Hamilton uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2018?
(c) Prepare a complete set of journal entries for 2017 (using the percentage-of-completion method).

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