The Kirby Construction Company was the low bidder on a specialized equipment contract. The contract bid was $5,400,000 with an estimated cost to complete the project of $4,800,000 . The contract period was 34 months , beginning March 1, 2014. The company uses the cost-to-cost method to estimate profits. A record of construction activities for the years 2014– 2017 follows: Actual Cost- Progress Billings Cash Year Current Year Receipts 2014 $2,800,000 $2,600,000 $2.200,000 2015 2,200,000 2,100,000 1,900,000 2016 600,000 700,000 700,000 2017 600,000 The estimated cost to complete the contract at the end of each accounting period is: 2014 $2,200,000 Novt na
The Kirby Construction Company was the low bidder on a specialized equipment contract. The contract bid was $5,400,000 with an estimated cost to complete the project of $4,800,000 . The contract period was 34 months , beginning March 1, 2014. The company uses the cost-to-cost method to estimate profits. A record of construction activities for the years 2014– 2017 follows: Actual Cost- Progress Billings Cash Year Current Year Receipts 2014 $2,800,000 $2,600,000 $2.200,000 2015 2,200,000 2,100,000 1,900,000 2016 600,000 700,000 700,000 2017 600,000 The estimated cost to complete the contract at the end of each accounting period is: 2014 $2,200,000 Novt na
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Annotatior
The Kirby Construction Company was the low bidder
on a specialized equipment contract. The contract bid
was $5,400,000 with an estimated cost to complete the
project of $4,800,000. The contract period was
34 months , beginning March 1, 2014. The company
uses the cost-to-cost method to estimate profits.
A record of construction activities for the years 2014–
2017 follows:
Actual Cost-
Cash
Progress
Billings
Year
Current Year
Receipts
2014
$2,800,000
$2,600,000
$2,200,000
2015
2,200,000
2,100,000
1,900,000
2016
600,000
700,000
700,000
2017
600,000
The estimated cost to complete the contract at the end
of each accounting period is:
2014
$2,200,000
Novt](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F73ba4b6d-c87b-446a-aef5-7e100af1b838%2Ffec59505-1d69-438b-9eae-6ef1ca5e5036%2Fnh4h568_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Annotatior
The Kirby Construction Company was the low bidder
on a specialized equipment contract. The contract bid
was $5,400,000 with an estimated cost to complete the
project of $4,800,000. The contract period was
34 months , beginning March 1, 2014. The company
uses the cost-to-cost method to estimate profits.
A record of construction activities for the years 2014–
2017 follows:
Actual Cost-
Cash
Progress
Billings
Year
Current Year
Receipts
2014
$2,800,000
$2,600,000
$2,200,000
2015
2,200,000
2,100,000
1,900,000
2016
600,000
700,000
700,000
2017
600,000
The estimated cost to complete the contract at the end
of each accounting period is:
2014
$2,200,000
Novt
![2014
$2,200,000
2015
500,000
2016
Instructions:
1. What are the revenue, cost, and gross profit
recognized for each of the years 2014-2016 under
the percentage-of-completion method? (Note:
Round percentage to two decimal places for
percentage completed.)
2. Give the journal entries for each of the years
2014-2016 to record the information from (1).
3. Give the journal entries in 2017 to record any
collections and to close out all construction
accounts.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F73ba4b6d-c87b-446a-aef5-7e100af1b838%2Ffec59505-1d69-438b-9eae-6ef1ca5e5036%2Fj2me4kv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2014
$2,200,000
2015
500,000
2016
Instructions:
1. What are the revenue, cost, and gross profit
recognized for each of the years 2014-2016 under
the percentage-of-completion method? (Note:
Round percentage to two decimal places for
percentage completed.)
2. Give the journal entries for each of the years
2014-2016 to record the information from (1).
3. Give the journal entries in 2017 to record any
collections and to close out all construction
accounts.
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