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E18-14B (Gross Profit on Uncompleted Contract)On July 1, 2014, Welton Inc. entered into a costplus-fixed-fee contract to construct a prototype robotic assembly line for New Car Corporation. At the contract date, Welton estimated that it would take 2 years

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E18-14B (Gross Profit on Uncompleted Contract)On July 1, 2014, Welton Inc. entered into a costplus-fixed-fee contract to construct a prototype robotic assembly line for New Car Corporation. At the contract date, Welton estimated that it would take 2 years to complete the project at a cost of $4,200,000. The fixed fee stipulated in the contract is $750,000. Welton appropriately accounts for this contract under the percentage-of-completion method.;During 2014 Welton incurred costs of $1,600,000 related to the project. The estimated cost at December 31, 2014, to complete the contract is $2,400,000. New Car was billed $1,200,000 under the contract.;Instructions;Prepare a schedule to compute the amount of gross profit to be recognized by Welton under the contract for the year ended December 31, 2014. Show supporting computations in good form.;(AICPA adapted)

 

Paper#75358 | Written in 18-Jul-2015

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