Question 1 During 2017, Nash Company started a construction job with a contract

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

Explanation / Answer

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

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