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E18-15B (Recognition of Loss, Percentage-of-Completion)In 2014 Norcraft Sisters Construction agreed to construct a residence hall at University of the North at a price of $8,500,000. The information relating to the costs and billings for this contract is

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E18-15B (Recognition of Loss, Percentage-of-Completion)In 2014 Norcraft Sisters Construction agreed to construct a residence hall at University of the North at a price of $8,500,000. The information relating to the costs and billings for this contract is shown below.;2014 2015 2016;Costs incurred to date $ 800,000 $4,050,000 $8,950,000;Estimated costs yet to be incurred 7,200,000 4,950,000 ?0?;Customer billings to date 500,000 4,000,000 8,500,000;Collection of billings to date 200,000 3,200,000 8,000,000;Instructions;(a) Assuming that the percentage-of-completion method is used, (1) compute the amount of gross profit to be recognized in 2014 and 2015, and (2) prepare journal entries for 2015.;(b) For 2015, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement.

 

Paper#75357 | Written in 18-Jul-2015

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