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.