In 2014 Nor-craft Sisters Construction agreed to construct a residence hall at University of the North at a price of $8,500,000. The information relating to the costs and billings for this contract is shown below.

Instructions
(a) Assuming that the percentage-of-completion method is used,
(1) Compute the amount of gross profit to be recognized in 2014 and 2015,
(2) Prepare journal entries for 2015.
(b) For 2015, show how the details related to this construction contract would be disclosed on the balance sheet and on the incomestatement.

Transcribed Image Text:

201420152016 $ 800,000 $4,050,000 $8,950,000 4,950,000 Costs incurred to date Estimated costs yet to be incurred Customer billings to date Collection of billings to date 7,200,000 00,000 4,000,000 200,000 3,200,000 8,500,000 8,000,000