Winter Company constructs office buildings in Ellensburg. It began a $50,000,000, 3-year contract on January 1, 2018. The following information is available regarding this contract.  

	2018	2019	2020
Costs incurred during current year	$ 12,000,000	$ 20,000,000	$ 13,000,000
Estimated costs to complete at year end	28,000,000	10,000,000	0
Progress billings during year	10,000,000	18,000,000	22,000,000
Collections on billings during year	8,000,000	17,000,000	25,000,000

Required:

1. Assuming Winter uses the percentage-of-completion method, calculate the gross profit to be recognized in 2018 and 2019.

2. Assuming Winter uses the percentage-of-completion method, indicate how the contract would be presented on Winter’s income statement for the year ended December 31, 2019.

3. Assuming Winter uses the completed-contract method, calculate the gross profit to be recognized in 2020.  

4. Assuming Winter uses the completed-contract method, indicate how the contract would be presented on Winter’s balance sheet (Accounts Receivable and Construction-in-process) for the year ended December 31, 2019.

5. Assuming Winter uses the completed-contract method and billings in 2019 are $40,000,000 instead of $18,000,000, what will be the effect on the balance sheet in 2019?

Answer rating: 100% (QA)

2018 2019 2020 Costs incurred during current year 12000000 20000000 13000000 Cost incurred till date ... View the full answer