Young Tree Construction Company uses the percentage-of-completion method of accounting. In 2014, Young Tree began work under a contract with a contract price of $1,500,000. Other details follow:

Instructions
(a) What portion of the total contract price would be recognized as revenue in 2014? In 2015?
(b) Assuming the same facts as those above except that Young Tree uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2015?
(c) Prepare a complete set of journal entries for 2014 (usingpercentage-of-completion).

Transcribed Image Text:

2014 2015 Costs incurred during the year Estimated costs to complete, as of December 31 Billings to date Collections to date $980,000 $1,375,000 420,000 800,000 1,500,000 250,000 1,500,000