5. Joel Company contracted on 4 January 2008 to construct a building for $2,500,000. The project...

 

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5. Joel Company contracted on 4 January 2008 to construct a building for $2,500,000. The project was completed in 2010. Additional data follow: 2008 2009 $1,350,000 2010 $1,900,000 Costs incurred to date $ 560,000 1,040,000 450,000 Estimated cost to complete Billings to date 500,000 2,000,000 2,500,000 Collections to date 400,000 1,300,000 2,400,000 Required: (a) Calculate the income recognised by Joe under the of accounting in each of the years 2008, 2009, and 2010. percentage-of-completion method (5 marks) (b) Prepare all necessary entries for the year 2008. (10 marks) (c) Explain the difference between completed-contract method revenue recognition and percentage-of- completion revenue recognition. (5 marks) 5. Joel Company contracted on 4 January 2008 to construct a building for $2,500,000. The project was completed in 2010. Additional data follow: 2008 2009 $1,350,000 2010 $1,900,000 Costs incurred to date $ 560,000 1,040,000 450,000 Estimated cost to complete Billings to date 500,000 2,000,000 2,500,000 Collections to date 400,000 1,300,000 2,400,000 Required: (a) Calculate the income recognised by Joe under the of accounting in each of the years 2008, 2009, and 2010. percentage-of-completion method (5 marks) (b) Prepare all necessary entries for the year 2008. (10 marks) (c) Explain the difference between completed-contract method revenue recognition and percentage-of- completion revenue recognition. (5 marks)

Answer rating: 100% (QA)

Solution a b NET INCOME AS PER PERCENTAGE OF COMPLETION METHOD PARTICULARS 2008 20... View the full answer