Sanshain Construction Company has entered into a contract beginning January 1, 2019, to build a parking complex. It has been estimated that the complex will cost $600,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $900,000. The following data pertain to the construction period.
|Costs incurred to date||$270,000||$450,000||$610,000|
|Estimated costs to complete||330,000||150,000||–0–|
|Billings to date||270,000||550,000||900,000|
|Collections to date||240,000||500,000||900,000|
- Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.
- Record the necessary journal entry each year.
- Prepare the partial income statement and statement of financial position for all periods (2019, 2020 and 2021)
- Using the cost-recovery method, compute the estimated gross profit that would be recognized during each year of the construction period.
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