On march 1 2012 chance company entered into a contract to

Reference no: EM13568528

On March 1, 2012, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,016,000 and will take 3 years to complete. The contract price was $3,494,000. The following information pertains to the construction period.

	2012	2013	2014
Costs to date	$624,960	$1,430,650	$2,048,000
Estimated costs to complete	1,391,040	584,350	-0-
Progress billings to date	892,000	1,805,000	3,494,000
Cash collected to date	842,000	1,678,000	3,345,000

A. Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.

Gross profit recognized in 2012-----		$458180
Gross profit recognized in 2013		$591910
Gross profit recognized in 2014		$395910

B. Prepare all necessary journal entries for 2014

Account Titles and Explanation

Debit

Credit

1. ________________ _______ _______

(to record cost of constructino)

2. _______________ _______ ________

(to record progress billings)

3. ________________ ________ _________

(to record collections)

4. ________________ _________ _________

(to recognize revenue)

5. ________________ __________ _________

(To record completion of contract)

Reference no: EM13568528

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