Question: During year 1, Meriwether Construction Company started a construction job with a contract price of $3,000,000. The job was completed in year 2 and the
During year 1, Meriwether Construction Company started a construction job with a contract price of $3,000,000. The job was completed in year 2 and the company uses the percentage of completion method. The following information is available for year 1 and year 2:
| Year 1 | Year 2 | |
| Cost incurred to date | $500,000 | $2,400,000 |
| Estimated cost to complete | 1,500,000 | 0 |
| Billings to date | 300,000 | 1,800,000 |
| Collections to date | 100,000 | 1,600,000 |
What amount of gross profit should Meriwether recognize for this job for year 2?
So following the table below, why are we putting the contract price of $3,000,000 both in Year 1 and year 2?
The question says 'a contract price of $3,000,000' and it does not indicate the price is for each year. Please explain.
The table is from this https://www.chegg.com/homework-help/Intermediate-Accounting-1st-edition-chapter-8-problem-8MC-solution-9780133252446
S.No Particulars Contract Price Less:- Total cost Difference (A-B) Percentage Completion Gross Profit for the year (CXD) Less:- Recognition of profit in prior years Gross profit for the year (E-F) Year 1 Year 2 $30,00,000 $30,00,000 $20.00.000 $24.00.000 $10,00,000 $6,00,000 25% 100% $2,50,000 $6,00,000 $2,50,000 $2,50,000 $3,50,000 $0 G
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