Question:
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