On March 1, 2014, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and wi
On March 1, 2014, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000. The following information pertains to the construction period.
\r\n2014 2015 2016
\r\nCosts to date $ 600,000 $1,560,000 $2,100,000
\r\nEstimated costs to complete 1,400,000 520,000 –0–
\r\nProgress billings to date 1,050,000 2,000,000 3,000,000
\r\nCash collected to date 950,000 1,950,000 2,850,000
\r\nInstructions
\r\n(a) Compute the amount of gross profit to be recognized each year, assuming the percentage ofcompletion method is used.
\r\n(b) Prepare all necessary journal entries for 2016.
\r\n(c) Prepare a partial balance sheet for December 31, 2015, showing the balances in the receivables and inventory accounts.