Acc421 Intermediate Accounting: E18-4 During 2010 Nielsen Company started a construction job

Acc421 Intermediate Accounting

E18-4 (Recognition of Profit on Long-Term Contracts)
During 2010 Nielsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2012. The following information is available.
2010 2011 2012
Costs incurred to date 400,000 825,000 1,070,000
Estimated costs to complete 600,000 275,000 -
Billings to date 300,000 900,000 1,600,000
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 2011.
(c) Compute the amount of gross profit to be recognized each year, assuming the cost-recovery method is used.
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