Journal entries for 2010 under percentage completion method

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Reference no: EM13503858

Discuss the revenue principle and the matching principle as per the generally accepted accounting principles (GAAP).

Contrast the percentage-of-completion method of revenue recognition versus the completed contract method.

Solve this accounting problem for the ABC grocery company relating to revenue and expense recognition as per GAAP: ABC Corporation uses the percentage-of-completion method of accounting. In 2010, ABC entered into a contract for a contract price of $2,000,000.


2010

Costs incurred during the year

600,000

Estimated costs to complete as of Dec 31

900,000

Billings during the year

400,000

Collections during the year

300,000

What portion of the total contract price is recognized as revenue in 2010?

What is the profit recognized for 2010?

Prepare the journal entries for 2010 under the percentage completion method.

Reference no: EM13503858

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