Question

During 2017, Cullumber Company started a construction job with a contract price of $1,610,000. The job was completed in 2019. The following information is available. 2017 2018 2019 Costs incurred to date $434,300 $859,560 $1,073,000 Estimated costs to complete 575,700 242,440 -0- 1,610,000 Billings to date 301.000 897,000 271,000 1428,000 Collections to date 817,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used $ Gross profit recognized in 2017 $ Gross profit recognized in 2018 $ Gross profit recognized in 2019 eTextbook and Media List of Accounts

Answer 1

There are 2 parts in the questions. First part refers to the part of the question relating to revenue recognition and computation.Second is the journal entries to be recorded only for the year 2018 as asked.

Revenue to be recognised (Percentage of work completed in the x Total Contract test) given period value. Estimated cost incurred % = of completion Estimated total cost of the project Gtimated total cost of Gross Profit is to be based on nevenue Gross Profit = $1,610,000 - $1073,000 $5,37,000 contact coot. Contract price Gross Profit to be recognised each year - to be % of completion Revenue upto Profit necognised. 2017 43% 6,92,300 2,30,910 - the year ($5,37,000 X 43.7.) $4,34,30 0 $4,34,300 +5,75700 2018 78.1 12,55,800 1 $ 8,59,560 8,59,650 +2,42,440 16,10,000 X 781. J 4,18,860 ca upto 2018 Howeves for the year 2018 = 1,87,950 {$418,860 - $2,30,910] XA6,140 $ 5,37,000 (6) upto 2019 for the year 2019 Carb) 1,18,140 100). 2019 16,10,000

2018 Debit Credit Journal Entries To Record the cost incurred $8,59,560 $8,59,560 work-in- Progress Ale or To Accounts Payable $8,97,000 2. To necord the amounts billed Accounts Recienable TO Billings $8,97,600 3. To necond the Cash collections. ale or Alc's Recienable $8, 17,000 $8,17,000 To 4 Unbilled contract To contract Recienables Revenue Earned for unbilled Cabove to record work done). unbilled work is no unbilled work in However in there the a the question.