Question: S impson C onst r u c tion e n t ere d into a c ont r ac t to c o nst r

Simpson Construction entered into a contract to construct a floating bridge across a lake. The contract price for the bridge is $7,500,000. During 2012, costs of $1,800,000 were incurred representing 30% of total expected costs.

Prepare the necessary entries for 2014 to recognize gross profit for the year assuming the firm uses the

(1) completed-contract method.

(2) percentage-of-completion method.

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