Question

On July 1, 2017, Torvill Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $ 1,900,000. On July 1, Torvill estimated that it would take between 2 and 3 years to complete the building. On December 31, 2019, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2017, 2018, and 2019.

		At 12/31/17		At 12/31/18		At 12/31/19
Contract costs incurred to date		$ 300,000		$ 1,200,000		$ 2,100,000
Estimated costs to complete the contract		1,200,000		800,000		–0–
Billings to Gumbel		300,000		1,100,000		1,850,000

(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any field blank. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

2017

		$

		$

			%

		$

$

2018

		$

		$

		$

$

2019

				$

				$

				$

		$

$

(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2017, 2018, and 2019. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any fields blank. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

2018

$

2019

		$

$

Answer 1

Answer: Given,

Accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2017, 2018, and 2019.

THANK YOU!