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___________________ 
SOLUTION PREVIEW 
(a)                                                Computation
of Recognizable Profit/Loss
                                                           Percentage-of-Completion
Method
2007
          Costs to date
(12/31/07)                                                                                                   $1,500,000
          Estimated costs to
complete                                                                                              2,500,000
                    Estimated
total costs                                                                                              $4,000,000
File name: Nance Contractors agreed.doc      File type: .docx     PRICE:$8
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