On March 1, 2014 Spieth Company entered into a contract to build an apartment building. It...
On March 1, 2014 Spieth Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to compete. The contract price was $3,000,000. The following information pertains to the construction period.
2014 2015 2016
Cost to date 270,000 450,000 610,000
Estimated cost to complete 1,400,000 520,0000 0
Progress billing to date 1,050,000 2,000,000 3,000,000
Cash collected to date 950,000 1,950,000 2,850,000
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 2016
C) Prepare a partial balance sheet for December 31, 2015, showing the balance in the receivables inventory accounts.
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On March 1, 2014 Spieth Company entered into a contract to build
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