Reference no: EM132933937
McDonald Construction Company was the low bidder on a construction project to build an earthen dam for $1,800,000. The project began in 2020 and completed in 2021. Cost and other data are presented below:
2020 2021
Costs incurred during the year $ 450,000 $1,100,000
Estimated costs to complete 1,050,000 0
Billings during the year 400,000 1,400,000
Cash collections during the year 300,000 1,500,000
Assume that McDonald recognizes revenue on this contract over time according to percentage of completion.
Required:
Problem 1. Compute in proper format the amount of gross profit recognized during 2020 and 2021?
Problem 2. Prepare ONLY the 2020 journal entries to record costs, billings, collections, and profit recognition.
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