Steadfast Construction Ltd. builds apartment buildings & uses the percentage of completion method for revenue recognition. Information on a $2.8 million three-year construction contract is as follows: $ $ Costs incurred to date (at Dec 31) Estimated costs to complete (at Dec 31) Progress billings during the year (non-refundable $ Collections during the year $ 2021 2022 2023 500,000 $1,125,000 $1,825,000 1,500,000 $ 875,000 $ 650,000 $1,200,000 $ 950,000 450,000 $1,025,000 $1,150,000
Steadfast Construction Ltd. builds apartment buildings & uses the percentage of completion method for revenue recognition. Information on a $2.8 million three-year construction contract is as follows: $ $ Costs incurred to date (at Dec 31) Estimated costs to complete (at Dec 31) Progress billings during the year (non-refundable $ Collections during the year $ 2021 2022 2023 500,000 $1,125,000 $1,825,000 1,500,000 $ 875,000 $ 650,000 $1,200,000 $ 950,000 450,000 $1,025,000 $1,150,000
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter8: Revenue Recognition, Receivables, And Advances From Customers
Section: Chapter Questions
Problem 48P
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2 QUESTION: ACCOUNTING FOR LONG-TERM CONTRACTS
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Steadfast Construction Ltd. builds apartment buildings & uses the percentage of completion method
for revenue recognition. Information on a $2.8 million three-year construction contract is as follows:
2021
2022
2023
Costs incurred to date (at Dec 31)
500,000 $1,125,000 $1,825,000
$1,500,000 $ 875,000 $
Estimated costs to complete (at Dec 31)
Progress billings during the year (non-refundable $ 650,000 $1,200,000 $950,000
Collections during the year
450,000 $1,025,000 $1,150,000
$
Required:
$
1. Calculate the gross profit that should be recognized in 2022.
2. Prepare the journal entrties that should be recorded for 2022.
Note: Journal Entries for 2021 and 2023 are NOT required.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe5213aea-34f8-4732-8870-716467e80992%2Fa7aa1925-f8d1-4fe2-9ff6-ba2f5fd0baaa%2Fl34fk1_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5
6
2 QUESTION: ACCOUNTING FOR LONG-TERM CONTRACTS
3
7
4
8
2
9
10
1
3
4
5
5
Steadfast Construction Ltd. builds apartment buildings & uses the percentage of completion method
for revenue recognition. Information on a $2.8 million three-year construction contract is as follows:
2021
2022
2023
Costs incurred to date (at Dec 31)
500,000 $1,125,000 $1,825,000
$1,500,000 $ 875,000 $
Estimated costs to complete (at Dec 31)
Progress billings during the year (non-refundable $ 650,000 $1,200,000 $950,000
Collections during the year
450,000 $1,025,000 $1,150,000
$
Required:
$
1. Calculate the gross profit that should be recognized in 2022.
2. Prepare the journal entrties that should be recorded for 2022.
Note: Journal Entries for 2021 and 2023 are NOT required.
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