Question 1

Foremost construction company commenced a #50 million contract on January 2017 to construct a dual carriage way. The company expects the project will take 3 years to complete. The total estimated cost of the project are 45 million. Assume the following data for the completion of this project.

2017 2018 2019

Cost to date 10,000,000 24,000,000 40,200,000

Estimated cost to complete project 30,000,000 16,000,000 0

Progress billing during the year 9,000,000 14,000,000 27,000,000

Cash collected during the year 8,400,000 13,600,000 28,000,000

Required:

a. What is the amount of revenue and gross profit recognized on this contract?

b. Record the journal entries for the transaction.