hi, i need help with this please. Blue Construction Co contracted to build a bri

Question

hi, i need help with this please.
Blue Construction Co contracted to build a bridge for $3,000,000. Construction began in 2013 and was completed in 2014. date relating to the construction are:
2013 - costs incurred $990,000 estimated costs to complete $810,000
2014 - costs incurred $825,000
Blue uses percentage of completion method
1. how much revenue should be reported in 2013? show your computations ( i got $660,000 and i have no idea if it's right!
2. make the entry to record progress billings of $1,000,000 during 2013.
accts receivable $1,000,000
billing on construction in progress $1,000,000 ???? is this correct
3. make the entry to record the revenue and gross profit for 2013
4. how much gross profit should be reported for 2014? show your computations

i need this asap please (by saturday June 9 2012)
thanks

Explanation / Answer

total cost incurred in 2013 and 2014 = $990,000+825,000 =$1,815,000 1. percentage cost incurred in 2013 = 990,000/1,815,000 = 54.54 % there fore 54.54% of the project is completed in 2013 therefore revenue recognized in 2013 = 54.54% of total cost = 0.5454 * 3,000,000 =$1,636,363.63 2. your this answer correct 3. revenue 2013 = $1,636,363.63 profit = $1,636,363.63 - 990,000 = $646,363.63 4.revenue recognized in 2014 = (825,000/1,815,000 ) * 3,000,000 = $1,363,636.36 profit = $1,363,636.36 - $825,000 = $538636.36

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