On February 1,2007, Nance Contractors agreed to construct a building at a contract

On February 1,2007, Nance Contractors agreed to construct a building at a contract price of $6,000,000. Nance estimated total construction costs would be $4,000,000 and the project would be finished in 2009. Information relating to the costs and billings for this contract is as follows:

2007 2008 2009                                                                                                              SOLUTION

Total costs incurred to date $1,500,000 $2,640,000 $4,600,000

Estimated costs to complete 2,500,000 1,760,000 -0-

Customer billings to date 2,200,000 4,000,000 5,600,000

Collections to date 2,000,000 3,500,000 5,500,000

Instructions

Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and for completed-contract accounting, show the gross profit that should be recorded for 2007.

Percentage-of-Completion Completed-Contract

Gross Profit Gross Profit

2007 2007

2008 2008

2009 2009 CLICK HERE FOR SOLUTION