Inexperienced construction company Blue Spruce Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2,700,000. The work began in early 2020 and Blue Spruce incurred costs of $1,215,000. At December 31, 2020, the estimated future costs to complete the project totalled $1,215,000. During 2021, Blue Spruce ran into trouble with weather conditions and incurred the expected costs of $1,215,000 and estimated that it would need to spend an additional $390,000 to complete the project. During 2022, Blue Spruce reluctantly completed the project, incurring further costs of $400,000. Calculate the amount of gross profit or loss that should be recognized each year under the percentage-of-completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percent complete to 2 decimal places, e.g. 15.25.) Gross profit/(loss) Date December 31, 2020 December 31, 2021 $ December 31, 2021 $ Prepare the December 31, 2021 year-end journal entry to record costs, revenues, expenses, and losses from the contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round percent complete to 2 decimal places, e.g. 15.25.) December 31, 2022 Account Titles and Explanation $ Debit Credit
Inexperienced construction company Blue Spruce Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2,700,000. The work began in early 2020 and Blue Spruce incurred costs of $1,215,000. At December 31, 2020, the estimated future costs to complete the project totalled $1,215,000. During 2021, Blue Spruce ran into trouble with weather conditions and incurred the expected costs of $1,215,000 and estimated that it would need to spend an additional $390,000 to complete the project. During 2022, Blue Spruce reluctantly completed the project, incurring further costs of $400,000. Calculate the amount of gross profit or loss that should be recognized each year under the percentage-of-completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percent complete to 2 decimal places, e.g. 15.25.) Gross profit/(loss) Date December 31, 2020 December 31, 2021 $ December 31, 2021 $ Prepare the December 31, 2021 year-end journal entry to record costs, revenues, expenses, and losses from the contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round percent complete to 2 decimal places, e.g. 15.25.) December 31, 2022 Account Titles and Explanation $ Debit Credit
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 41P
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Transcribed Image Text:Inexperienced construction company Blue Spruce Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2,700,000.
The work began in early 2020 and Blue Spruce incurred costs of $1,215,000. At December 31, 2020, the estimated future costs to complete the project totalled
$1,215,000. During 2021, Blue Spruce ran into trouble with weather conditions and incurred the expected costs of $1,215,000 and estimated that it would need to
spend an additional $390,000 to complete the project. During 2022, Blue Spruce reluctantly completed the project, incurring further costs of $400,000.
Calculate the amount of gross profit or loss that should be recognized each year under the percentage-of-completion method. (Enter negative amounts using either a
negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percent complete to 2 decimal places, e.g. 15.25.)
Gross profit/(loss)
Date
December 31, 2020
December 31, 2021
$
December 31, 2021
$
Prepare the December 31, 2021 year-end journal entry to record costs, revenues, expenses, and losses from the contract. (Credit account titles are automatically indented
when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round percent complete to 2
decimal places, e.g. 15.25.)
December 31, 2022
Account Titles and Explanation
$
Debit
Credit
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