During 2010, Nielsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2012. The following information is available.
2010 2011 2012
Costs incurred to date $ 400,000 $ 825,000 $ 1,070,000
Estimated costs to complete $ 600,000 $ 275,000 $ –
Billings to date $ 300,000 $ 900,000 $ 1,600,000
Collections to date $ 270,000 $ 810,000 $ 1,425,000
A. Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.
b. Prepare all necessary journal entries for 2011.
c. Compute the amount of gross profit to be recognized each year assuming the completed-contract method is used. (If no profit is recognized, please enter 0, do not leave any fields blank.)