Part a compute the amount of gross profit to be recognized

Assignment Help Accounting Basics

Reference no: EM13568988

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

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

Answer:

Gross profit recognized in 2012: $458180
Gross profit recognized in 2013: $591910

Gross profit recognized in 2014: $395910

PART B:

Prepare all necessary journal entries for 2014.

Entry 1: (To record cost of Construction)

Entry 2: (To record progress Billings)

Entry 3: (To record Collections)

Entry 4: (To recognize Revenue)

Entry 5: (To record completion of the contract

Reference no: EM13568988

Questions Cloud

Calculate the effect on the companys total net operating : masse corporation uses part g18 in one of its products. the companys accounting department reports the following costs

A machine costs 200000 has a 14000 salvage value is : a new operating system for an existing machine is expected to cost 270000 and have a useful life of five years. the

At the beginning of 2013 pitman co purchased an asset for : at the beginning of 2013 pitman co. purchased an asset for 900000 with an estimated useful life of 5 years and an

Determine the amount of depreciation expense for the years : waldum company purchased packaging equipment on january 5 2012 for 135000. the equipment was expected to have a useful

Part a compute the amount of gross profit to be recognized : on march 1 2012 chance company entered into a contract to build an apartment building. it is estimated that the

He error was discovered on december 20 2013 ignore income : link co. purchased machinery that cost 1350000 on january 4 2011. the entire cost was recorded as an expense. the

Calculate darby sporting goods incs 2013 depreciation : darby sporting goods inc. has been experiencing growth in the demand for its products over the last several years. the

Updraft systems inc makes paragliders for sale through : updraft systems inc. makes paragliders for sale through specialty sporting goods stores. the company has a standard

To prepare the old machine for removal from the plant cost : goldman corporation bought a machine on june 1 2010 for 35934 f.o.b. the place of manufacture. freight to the point

User Account

All Pages