Estimated Gross Profit Assignment
1. Sanshain Construction Company has entered into a contract beginning January 1, 2019, to build a parking complex. It has been estimated that the complex will cost$600,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $900,000. The following data pertain to the construction period.
|Costs incurred to date||$270,000||$450,000||$610,000|
|Estimated costs to complete||330,000||150,000||–0–|
|Billings to date||270,000||550,000||900,000|
|Collections to date||240,000||500,000||900,000|
A. Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.
B. Record the necessary journal entry each year.
C. Prepare the partial income statement and statement of financial position for all periods (2019, 2020 and 2021)
D. Using the cost-recovery method, compute the estimated gross profit that would be recognized during each year of the construction period. Get Finance homework help today