Question - On March 1, 2010, Chance Company entered into a contract to build an apartment building. it is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000. The following information pertains to the construction period.
2010 2011 2012 costs to date 600,00 1,560,000 2,100,000
estimated costs to complete 1,400,000 520,000 -0-
progress billings to date 1,050,000 2,000,000 3,000,000
cash collected to date 950,000 1,950,000 2,850,000
(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.
(b) Prepare all necessary journal entries for 2012.
(c) Prepare a partial balance sheet for December 31, 2011, showing the balances in the receivables and inventory accounts.