On June 15, 2022, Eagles Construction Inc.(Eagles) signed a $360,000 contract to build a small building. Eagles
Question:
On June 15, 2022, Eagles Construction Inc.(Eagles) signed a $360,000 contract to build a small building. Eagles estimated that the total cost would be $320,000. Construction started immediately because the required completion date was July 31, 2023. Eagles's relevant data relating to this construction project were as follows:
2022 2023
Actual costs incurred $ 120,000 $ 204,000
Estimated costs to complete 200,000 -0-
Progress billings 112,000 248,000
Collections 110,000 250,000
Instructions
Calculate how much gross profit that Eagles should recognize each year, assuming:
a) Completed contract
b) Percentage-of-completion