What is the total gross profit earned on this project

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Question - At the beginning of 2013, the Wizards received a contract to build a new arena for $25 million. The project is estimated to take three years to complete. According to the contract, the Wizards will bill the buyer in installments over the construction period according to a prearranged schedule. The Wizards use the percentage of completion method to account for long-term contracts. Information related to the contract is as follows:


2013

2014

2015

Costs to Date

$7,500,000

$12,500,000

$20,500,000

Estimated Costs to Complete

$11,250,000

$7,500,000

$-

Billings during the year

$6,000,000

$10,000,000

$9,000,000

Cash collection during the year

$5,000,000

$7,000,000

$13,000,000

Record the entry for the costs of construction, progress billings, and collections in 2013.

Record the entry to recognize revenue, expense, and gross profit for 2014.

What is the entry to record the completion of the contract in 2015?

What is the total gross profit earned on this project?

Reference no: EM132074219

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