On February 1, 2020, Mar Contractors agreed to construct a building at a contract price of $15,400,000. Mar initially estimated total construction costs would be $12,000,000 and the project would be finished in 2023. Information relating to the costs and billings for this contract during 2020-2022 is as follows: Total costs incurred during the year Estimated costs to complete Customer billings to date Collections to date 2020 4,500,000 7,500,000 6,600,000 6,000,000 2021 5,300,000 4,200,000 12,000,000 10,500,000 2022 4,000,000 1,800,000 13,800,000 13,500,000 a. Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract and all the necessary journal entries for the years ended December 31, 2020, 2021, and 2022. b. Using the cost-recovery method, prepare schedules to compute the profit or loss to be recognized as a result of this contract all the necessary journal entries to record the costs, expenses and revenue for the years ended December 31, 2020, 2021, and 2022. (Journal entries for billings and collection are not required.)
On February 1, 2020, Mar Contractors agreed to construct a building at a contract price of $15,400,000. Mar initially estimated total construction costs would be $12,000,000 and the project would be finished in 2023. Information relating to the costs and billings for this contract during 2020-2022 is as follows:
Total costs incurred during the year Estimated costs to complete Customer billings to date Collections to date
2020 4,500,000 7,500,000
6,600,000 6,000,000
2021 5,300,000 4,200,000 12,000,000 10,500,000
2022 4,000,000 1,800,000
13,800,000 13,500,000
a. Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract and all the necessary
b. Using the cost-recovery method, prepare schedules to compute the profit or loss to be recognized as a result of this contract all the necessary journal entries to record the costs, expenses and revenue for the years ended December 31, 2020, 2021, and 2022. (Journal entries for billings and collection are not required.)
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