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question e18 12 recognition of profit on long termcontracts during 2012 nilsen compa 4280207

Question

E18-12 (Recognition of Profit on Long-TermContracts) During 2012, Nilsen Company started aconstruction job with a contract price of $1,774,000. The job wascompleted in 2014. The following information is available.

 

 

2012

 

2013

 

2014

Costs incurred to date

 

$361,760

 

$814,720

 

$1,084,000

Estimated costs to complete

 

590,240

 

257,280

 

?0?

Billings to date

 

304,900

 

890,800

 

1,774,000

Collections to date

 

260,500

 

813,600

 

1,430,000

Instructions

(a) Compute the amount of gross profit to berecognized each year, assuming the percentage-ofcompletion

method is used.

(b) Prepare all necessary journal entries for2013.

(c) Compute the amount of gross profit to berecognized each year, assuming the completed-contract

method is used.

 

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