(Recognition of Revenue on Long-Term Contract and Entries) Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2012, Hamilton began work under contract #E2-D2, which provided for a contract price of $2,200,000. Other details follow:
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2012
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2013
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Costs incurred during the year
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$640,000
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$1,425,000
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Estimated costs to complete, as of December 31
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960,000
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-0-
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Billings during the year
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420,000
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1,680,000
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Collections during the year
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350,000
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1,500,000
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Instructions
(a) What portion of the total contract price would be recognized as revenue in 2012? In 2013?
(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 2013?
(c) Prepare a complete set of journal entries for 2012 (using the percentage-of-completion method).