Chase Construction Company (CCC) entered into a contract to build a parking complex. The project will commence on January 1, 2014. The complex will cost approximately $600,000 and will take 3 years to complete construction. CCC will bill its client $900,000 for the construction.
The following information contain data for the construction
Description201420152016
Costs to date$270,000$450,000$610,000
Estimated costs to complete330,000150,0000
Progress billings to date270,000550,000900,000
Cash collected to date240,000500,000900,000
Required
a.Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year (2014, 2015, and 2016) of the construction.
b.Prepare all necessary journal entries for each year of the construction.