E18-26 (Recognition of profit on long-time contracts) during 2014, Nilsen Company started a construction job with a contract price of $1,600.000. The job was completed in 2016. The following information is available.
|
|
2014
|
2015
|
2016
|
|
Costs incurred to date
|
$400,000
|
$825,000
|
1,070,000
|
|
Estimated costs to complete
|
6,000,000
|
275,000
|
0
|
|
Billings to date
|
3,000,000
|
900,000
|
1,600,000
|
|
Collections to date
|
270,000
|
810,000
|
1,425,000
|
Instructions
(a) Compute the amount of gross profit to be recognized each year, assuming the percentage-of- completion method is used.
(b) Prepare all necessary journal entries for 2015
(c) Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used