Acc421 Intermediate Accounting: E18-4 During 2007 Pierson Company started

Acc421 Intermediate Accounting
E18-4 Recognition of Profit on Long-Term Contracts
During 2007 Pierson Company started a construction job with a contract price of $1,500,000. The job was completed in 2009. The following information is available.
2007 2008 2009
Costs incurred to date 400,000 935,000 1,070,000
Estimated costs to complete 600,000 165,000 -
Billings to date 300,000 900,000 1,500,000
Collections to date 270,000 810,000 1,425,000
Instructions
(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 2008.
(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract method is used.
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