Long-Term Contracts

Koolman Construction Company began work on a contract in 2019. The contract price is $3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows:

	2019	2020
Costs incurred during the year	$600,000	$700,000
Estimated costs to complete, December 31	1,400,000	1,200,000
Billings during the year	500,000	850,000
Collections during the year	400,000	800,000

Required:

Compute the gross profit or loss recognized in 2019 and 2020. If there is a loss a minus sign must be entered.

	2019	2020
Construction costs incurred to date
Estimated costs to complete
Total estimated costs
Percentage completed
Revenue to date
Revenue recognized in current year
Costs incurred in current year
Profit (loss) recognized

Prepare the appropriate sections of the income statement for each year. If there is a loss a minus sign must be entered.

	2019	2020
Construction revenue
Construction expense
Gross profit (loss)

Prepare the appropriate sections of the ending balance sheet for the year 2019.

Current Assets:
Accounts receivable
Inventory:
Construction in progress
Less: Partial billings
Costs and recognized profit not yet billed

Prepare the appropriate sections of the ending balance sheet for 2020.

Current Assets:
Accounts receivable
Inventory:
Construction in progress
Less partial billings
Costs and recognized profit not yet billed