During 2014 AFCO started a construction job with a contract price of $2,500,000. The job was completed in 2016. The following information is available.

Instructions
(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.
(b) Prepare all necessary journal entries for 2015.
(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract method isused.

Transcribed Image Text:

2014 2015 2016 $600,000 $1,435,000 $2,100,000o Costs incurred to date Estimated costs to complete Billings to date Collections to date 1,400,000 100,000 100,000 615,000 500,000 300,000 2,500,000 2,000,000