The construction company entered into a 3-year contract to build a bridge. The required contract price is P5,600,00. The following cost data relate to the construction activities: Cost to date Estimated cost to complete Progress billings each year Collections of billing each year 20x1 P1,512,000 3,528,000 2,240,000 1,960,000 20x2 4,032,000 448,000 2,240,000 2,240,000 20x3 4,536,000 1,120,000 1,400,000 The company uses cost to cost percentages in measuring progress to satisfying a performance obligation. Required: 1. Calculate revenue, cost and gross profit recognized each year-end 2. Determine the balance sheet presentation this contract at end of 20x1 and 20x2 3. Prepare all journal entries each year

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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.