Nance Network Consultants, Incorporated uses the percentage- of- ­completion method to account for its long- term contracts. It uses the cost- to- cost approach to measure progress. During the current year, Nance signed a contract to develop a computer network for an international accounting firm. Information related to the contract is presented below.

Required
a. Compute the percentage- of- completion for each year.
b. Compute the gross profit and revenue to be recognized each year of the contract.
c. Prepare the journal entries required for each year of the contract.
d. Prepare the t- accounts for Construction in Progress, Billings on Construction in Progress, and Accounts Receivable. e. Determine the net asset (liability) for each year of the contract on December 31.

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Contract price $900,000 2015 2016 2017 Actual construction costs incurred during the year Construction costs incurred in pricr years Cumulative construction costs incurred to date Estimated costs to complete Estimated total costs $200,000 $300,000 S150,000 0 $200,000 $500,000 S200,000 $500,000 $650,000 $400,000 $300,000 S600,000 S800,000 650,000 $300,000 $220,000 $380,000 $200,000 Progress billings made during the year Cash collections during the year $400,000 $100,000