In 2014, Gurney Construction Company agreed to construct an apartment building at a price of $1,666,000. The information relating to the costs and billings for this contract is shown below.
2014 2015 2016
Costs incurred to date $417,790 $764,250 $1,135,000
Estimated costs yet to be incurred 601,210 254,750 –0–
Customer billings to date 290,700 878,400 1,666,000
Collection of billings to date 258,000 707,100 1,413,000
(a) Assuming that the percentage-of-completion method is used.
(1) compute the amount of gross profit to be recognized in 2014 and 2015.
(2) prepare journal entries for 2015
(b) For 2015, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement.