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.