In 2014, Ronalda Construction Inc. agreed to construct an apartment building at a price of $10 million. Information on the costs and billings for the first two years of this contract is as follows:

Instructions
Assun1e the earnings approach is used. Round the percentage complete to two decimal places.
(a) For the percentage-of-completion method, (1) calculate the amount of gross profit to be recognized in 2014 and 2015, and (2) prepare the journal entries for 2014 and 2015.
(b) For 2014 and 2015, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement.

Transcribed Image Text:

2014 2015 Costs incurred in the period Estimated costs yet to be incurred Customer billings in the period Collection of billings in the period $2,180,000 00 1,700,000 4,000,000 2,000,000 2,000,000 4.300,000 3,000,000