Fraternal Brothers provides consulting services on contract for a standard hourly rate of $100 per hour. The contracts allow the company to invoice the client evenly during the contract period. The company’s average cost is $70/hour. At the end of December 31, 2019, its fiscal year-end, the company had the following projects still in progress:

Required:

Identify any errors or likely errors in Fraternal Brothers’s revenue recognition for their contracts.

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Project start date Client (y/m/d) Contracted Budget completion hours in date contract Alpha 2019/2/5 2021/2/5 Beta 2019/2/28 2020/2/29 Chi 2019/4/9 2020/4/9 Delta 2019/5/19 2020/5/19 2019/6/28 2020/6/28 2019/8/7 2019/10/6 Epsilon Phi Gamma Eta 2019/9/16 2020/9/16 2019/10/26 2019/11/25 % Hours to date complete 96.0 87.2 99.0 69.4 113.4 21.3 44.5 42.9 88.7 14,580 14,000 6,000 5,230 9,600 9,500 3,600 2,500 5,440 6,170 750 160 4,400 350 44,720 1,960 150 39,670 Budgeted total revenue @ $100/hr $1,458,000 600,000 960,000 360,000 544,000 75,000 440,000 35,000 $4,472,000 Revenue recorded $1,400,000 523,000 950,000 250,000 544,000 16,000 196,000 15,000 $3,894,000 Billed to date $ 656,100 504,000 700,800 223,200 277,440 127,600 $2,489,140 Accrued revenue $743,900 19,000 249,200 26,800 266,560 16,000 68,400 15,000 $1,404,860