Question

Question 1 During 2017, Nash Company started a construction job with a contract price of $1,580,000. The job was completed in 2019. The following information is available. 20172018 2019 Costs incurred to date Estimated costs to complete Billings to date Collections to date $366,300 $802,270 $1,080,000 623,700 296,730 297,000 906,000 1,580,000 270,000 802,000 1,427,000 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 SHOW LIST OF ACCOUNTS LINK TO TEXT

Answer 1

	Percentage completion method	2017	2018	2019
	Cost incurred in till previous year	0	366300	802270
ADD	Cost incurred during the year	366300	435970	277730
	Total cost incurred till date	366300	802270	1080000
ADD	Estimated cost to be incurred	623700	296730	0
	Total estimated cost to be incurred	990000	1099000	1080000
	Percentage of completion (A)	37%	73.00%	100%
	(cost incurred till date /total estimated cost )
	Total revenue (B)	1580000	1580000	1580000
	Total revenue recognized (A *B)	584600	1153400	1580000
Less	Revenue recognized in previous year	0	584600	1153400
	revenue recognized in current year	584600	568800	426600
		2017	2018	2019
	Revenue	584600	568800	426600
Less	Cost incurred	366300	435970	277730
	Gross profit	218300	132830	148870
2018
1	Construction in progress	435970
	Accounts payable		435970
2	Contracts receivable	609000	(906000-297000)
	Progress billings		609000
3	Construction in progress	148630
	Construction expense	435970
	Construction revenue		584600
4	Cash	532000
	Contract receivable		532000