Problem: Howard Construction Co. contracted to build a bridge for $3,000,000. Construction began in 2004 and was completed in 2005. Data relating to the construction are:
2004 2005
Costs incurred $990,000 $825,000
Estimated costs to complete 810,000 ??
Howard uses the percentage-of-completion method.
INSTRUCTIONS:
(a) How much revenue should be reported for 2004? Show your computation.
(b) Make the entry to record progress billings of $1,000,000 during 2004.
(c) Make the entry to record the revenue and gross profit for 2004.
(d) How much gross profit should be reported for 2005? Show your computation.