Dobson Construction specializes in the construction of commercial and industrial buildings. The contractor is experienced in bidding long-term construction projects of this type, with the typical project lasting fifteen to twenty-four months. The contractor uses the percentage-of-completion method of revenue recognition since, given the characteristics of the contractor's business and contracts, it is the most appropriate method. Progress toward completion is measured on a cost-to-cost basis. Dobson began work on a lump-sum contract at the beginning of 2019. As bid, the statistics were as follows: Contract price $4,000,000 Estimated costs $3,000,000 At the end of the first year, the following was the status of the contract: Billings to date $2,250,000 Costs incurred to date 1,200,000 Latest forecast total cost 3,000,000 Instructions

(a) Compute the percentage of completion on the contract at the end of 2019.

(b) Indicate the amount of gross profit that would be reported on this contract at the end of 2019.

(c) Make the journal entry to record the income (loss) for 2019 on Dobson's books.

Answer rating: 100% (QA)

a Computation of the percentage of completion on the contract at the end of 2019 Percentage of compl... View the full answer