Use the percentage-completion method and show all calculations and explanation in detail. Version 1: (breakeven situation; interim loss)On February 1, 2016, Fair Contractors agreed to construct a building at a contract price of$3,000,000. Fair estimated total construction costs would be $2,000,000 and the project wouldbe finished in 2018. Information relating to the costs and billings for this contract is as follows:2016750,0002017$1,320,0002018$3,000,000Total costs incurred to date1,500,000-0-Estimated costs to complete (not yet incurred) 1,250,000Assume the company uses the % of completion method to record revenue. Round to 2 decimalplaces.Required:a. Calculate the revenue to be recognized in 2016, 2017 and 2018. Show your calculations.b. Prepare a partial Income Statement for 2016, 2017 and 2018, calculating gross profit (loss).c. Prepare the year end journal entries in 2016 and 2017.

Companies are using percentage completion method to record revenue from contract. Completion % will…

ished in 2018. Information relating to the costs and billings for this contract is as follows: 2016 2018 costs incurred to date 750.000 $3,000,000 -0- ated costs to complete (not yet incurred) 1,250,000 ne the company uses the % of completion method to record revenue. Round to 2 decimal S. 2017 $1,320,000 1,500,000 ired: lculate the revenue to be recognized in 2016, 2017 and 2018. Show your calculations. pare a partial Income Statement for 2016, 2017 and 2018, calculating gross profit (loss). pare the year end journal entries in 2016 and 2017.

ished in 2018. Information relating to the costs and billings for this contract is as follows: 2016 2018 costs incurred to date 750.000 $3,000,000 -0- ated costs to complete (not yet incurred) 1,250,000 ne the company uses the % of completion method to record revenue. Round to 2 decimal S. 2017 $1,320,000 1,500,000 ired: lculate the revenue to be recognized in 2016, 2017 and 2018. Show your calculations. pare a partial Income Statement for 2016, 2017 and 2018, calculating gross profit (loss). pare the year end journal entries in 2016 and 2017.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 26E

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