(Answered) Part ahoward construction co contracted to build a bridge

Accounting

Part A

Howard Construction Co. contracted to build a bridge for $3,000,000. Construction began in 2012 and was completed in 2013. Data relating to the construction are:

2012 2013

Costs incurred $990,000 $825,000

Estimated costs to complete 810,000 —

Howard uses the percentage-of-completion method.

Instructions

(a) How much revenue should be reported for 2012? Show your computation.

(b) Make the entry to record progress billings of $1,000,000 during 2012.

(d) How much gross profit should be reported for 2013? Show your computation.

Part B

Tanner Furniture Company concluded its first year of operations in which it made sales of $1,500,000, all on installment. Collections during the year from down payments and installments totaled $600,000. Purchases for the year totaled $900,000; the cost of merchandise on hand at the end of the year was $180,000. Tanner uses a perpetual inventory system.

Instructions

Using the installment-sales method, make summary journal entries to record:

(a) the installment sales and cash collections.

(b) the cost of installment sales.

(d) the realized gross profit.

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