During 2017, Whispering Company started a construction job with a contract price

Question

During 2017, Whispering 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 Estimated costs to complete Billings to date Collections to date $410,000 $754,800 $1,067,000 90,000 355,200 297,000 899,000 1,610,000 272,000 818,000 1,437,000 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 s

Explanation / Answer

*Various accounts is used to represent Material, Accounts Payable, Cash e.t.c

Completed Contract Method:

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2017 2018 2019 Contract price $        1,610,000 $ 1,610,000 $ 1,610,000 Actual cost to Date $            410,000 $     754,800 $ 1,067,000 Estimated Cost to complete $            590,000 $     355,200 $                 -   Total Estimated Cost $        1,000,000 $ 1,110,000 $ 1,067,000 Estimated Gross Profit
Contract Price- Estimated Cost) $            610,000 $     500,000 $     543,000 % Completion 41% 68% 100% Gross Profit Earned till Date $            250,100 $     340,000 $     543,000 Gross Profit of Previous Year $     250,100 $     340,000 Gross Profit recognised $            250,100 $        89,900 $     203,000

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