Nance Network Consultants. Incorporated uses the percentage-of-completion method to account for its long-term contracts. It uses the cost-to-cost approach to measure progress. During the current year, Nance signed a contract to develop a computer network for an international accounting firm. Information related to the contract follows.

Required

a. Compute the percentage-of-completion for each year.

b. Compute the gross profit and revenue t o b e recognized each year of the contract.

c. Prepare the journal entries required for each year of the contract.

d. Prepare the t-accounts for construction in progress, billings on construction in progress, and accounts receivable.

e. Determine the net asset (liability) for each year of the contract on December 31.

Contract price $300. 000 2018 2019 2020 Actual construction costs incured dur ng theyear Construction costs incurred in prioryears Cumu ative constiuct on costs incurred to date Estimated costs to comp ete Estimated total costs Progress blings made during the year Cash colect ons durng the year $200 000 1300 000 $150,000 200,000 500,000 200 000 400 000 600 000 650 000 500,000 300 000 800,000 400,000 380 000 650,000 100,000 300 000 220 000 200 000