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

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
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   

Percentage of completion method and completed contract methods.

1. Complete the revenue and gross profit to be recognized in each year.

2. Prepare the 2009 journal entries to record the construction costs, billings, collections, and revenue recognition

3. Prepare the 2009 journal entries for revenue recognition if the completed contract method was used.
                                                      CLICK HERE FOR SOLUTION