Question: During 2017, Ivanhoe Company started a construction job with a contract price of $1,590,000. The job was completed in 2019. The following information is available.
During 2017, Ivanhoe Company started a construction job with a contract price of $1,590,000. The job was completed in 2019. The following information is available.
| 2017 | 2018 | 2019 | ||||
| Costs incurred to date | $366,300 | $831,440 | $1,067,000 | |||
| Estimated costs to complete | 623,700 | 262,560 | 0 | |||
| Billings to date | 297,000 | 894,000 | 1,590,000 | |||
| Collections to date | 270,000 | 816,000 | 1,417,000 |
a) Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.
Gross profit in 2017
Gross profit in 2018
Gross profit in 2019
b) Prepare all necessary journal entries for 2018.
Dr. Construction in Process
Cr. Materials, Cash, Payables
--
Dr. Accounts Receivable
Cr. Billings on Construction in Process
--
Dr. Cash
Cr. Accounts Receivable
--
Dr. Construction in Process
Dr. Construction Expense
Cr. Revenue from Long Term Contracts
c) Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.
2017
2018
2019
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