P18-2 Shanahan Construction Company has entered into a contract beginning January 1, 2014, 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.

2014 2015 2016
Costs to date $270,000 $450,000 $610,000
Estimated costs to complete ?330,000 ?150,000 -0-
Progress billings to date ?270,000 ?550,000 ?900,000
Cash collected to date ?240,000 ?500,000 ?900,000

Instructions

Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.

Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.

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Posted on May 21, 2016Author TutorCategories Question, Questions