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Recognition of Profit and Entries on Long-Term Contract On March 1, 2010, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The

Recognition of Profit and Entries on Long-Term Contract On March 1, 2010, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000. The following information pertains to the construction period.

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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 2012.

(c) Prepare a partial balance sheet for December 31, 2011, showing the balances in the receivables and inventoryaccounts.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Transcribed Image Text:

2012 2011 2010 Costs to date Estimated costs to complete Progress billings to date Cash collected to date $1,560,000 $2,100,000 1,400,000 1,050,000 -0- 3,000,000 2,000,000 1,950,000 2,850,000 950,000

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a Gross profit recognized in Contract price Costs Costs to date Estimated costs to complete Total es…View the full answer


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Related Book For  answer-question
Intermediate Accounting

Intermediate Accounting

ISBN: 978-0470423684

13th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield

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Posted Date: February 19, 2011 03:44:37
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A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit

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