Tuscany Boatbuilders was recently awarded a $16,700,000 contract to construct a luxury liner for Queen Cruiseliners Inc. Tuscany estimates it will take 42 months to complete the contract. The company uses the cost-to-cost method to estimate profits. The following information details the actual and estimated costs for the years 2012-2015.
Year........................ Actual Cost-Current Year............. Estimated Cost to Complete
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... $6,400,000............................... $8,700,000
2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 5,200,000.................................. 4,600,000
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 4,100,000.................................. 1,500,000
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,065,000.............................................. 0
Instructions:
1. Compute the revenue, cost, and gross profit to be recognized for each of the years 2012-2015 under the percentage-of-completion method. (Note: Round percentage to two decimal places for percentage completed.)
2. Give the journal entries for each of the years 2012-2015 to record the information from (1).