Percentage Completion Method

On January 1, 2007, XYZ signed a contract with TTY to build a Cats building for a contract price of $700. The construction is expected to take 3 years to complete.

On December 31, 2007, XYZs accountant gathered the following details pertaining to the CATS building project.

	2007
Costs incurred during the year	100
Estimated cost to complete	400
Invoices raised on CATS during the year	80
Cash collections from CATS	50

XYZs accounting period is the calendar year and XYZ uses the percentage completion method to recognize revenues.

Required:

1. Compute the percentage of completion in 2007 for the CATS project.
2. Record the transactions for 2007 pertaining to the CATS project in XYZs accounting books. Assume that all costs incurred during the year were paid in cash.
3. Prepare CATS Revenues and Cost of Project portion of the Income Statement for 2007 and Current Assets (not including cash) and Current Liabilities portion of the Balance Sheet at the end of 2007 pertaining to CATS project.