Problem
On March 1, 2014, Chance Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price was $3,000,000. The following information pertains to the construction period.
|
2014
|
2015
|
2016
|
|
Costs to date
|
$600,000
|
$1,560,000
|
$2,100,000
|
|
Estimated costs to complete
|
1,400,000
|
520,000
|
-0-
|
|
Progress billings to date
|
1,050,000
|
2,000,000
|
3,000,000
|
|
Cash collected to date
|
950,000
|
1,950,000
|
2,850,000
|
(a) Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.