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Sherman construction company has entered into a contract

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Sherman Construction Company has entered into a contract beginning January 1, 2013 to build a parking complex for the city of Lancaster. It has been estimated that the complex will cost $600,000 and will take 3 years to construct. The complex will be billed to the city at $900,000. The following data pertain to the construction period.

    2013                 2014                2015

Costs to date                                                    $270,000           $450,000           $610,000

Estimated costs to complete                            330,000           150,000                -0-

Progress billings to date                                  270,000           550,000           900,000

Cash Collected to date                                     240,000           500,000           900,000

(a) Using the percentage of completion method, compute the estimated gross profit that would be recognized during each year of the construction period.

(b) Using the completed contract method, compute the estimated gross profit that would be recognized during each year of the construction period.

Reference no: EM13482404

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