Osborn Construction Company began operations January 2, 2013. During the year, Osborn entered into a contract with Redbeard Razor Corporation to construct a manufacturing facility. At that time, Osborn estimated that it would take 5 years to complete the facility at a total cost of $4,800,000. The total contract price for construction of the facility is $6,000,000. During the year, Osborn incurred $1,250,000 in construction costs related to the construction project. The estimated cost to complete the contract is $3,750,000. Redbeard was billed and paid 30% of the contract price.
If an amount is zero, enter zero.
1) Compute the amount of gross profit to be recognized for the year ended December 31, 2013 under the completed-contract method xxxxxx
2) Prepare schedules to compute the amount of gross profit to be recognized for the year ended December 31, 2013, and the amount to be shown as "cost of uncompleted contract in excess of related billings" or "billings on uncompleted contract in excess of related costs" on December 31, 2013, under the following methods:
a) Complete Contract Method
Construction Costs incurred during the year xxxxx
Partial Billings on the contract xxxxx
Billings on uncompleted contract in excess of related costs xxxxx
3) Percentage-of-completion method (Computation of Gross Profit)
Total Contract Price xxxxx
Total estimated Cost xxxx
Estimated total gross profit from contract xxxxx
Percentage of completion xxxxx
Gross Profit recognized during the year xxxx