Waterway Construction Company uses the percentage-of-completion method of accounting. In 2017, Waterway began work under contract #E2-D2, which provided for a contract price of $2,170,000. Other details follow:
2017 2018
Costs incurred during the year $615,810 $1,422,000
Estimated costs to complete, as of December 31 963,190 –0–
Billings during the year 426,0002 170,000
Collections during the year 343,0001 520,000
1) What portion of the total contract price would be recognized as revenue in 2017? In 2018?
2) Assuming the same facts as those above except that Waterway uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2018?
3) Prepare a complete set of journal entries for 2017 (using the percentage-of-completion method).