Revenue Recognition

Dear SolutionLibrary,

I am having some difficulty with this problem. I would really appreciate the assistance when you get the chance. Thank you so much in advance for taking the time to review my post.

On February 1, 2006 Toms River Construction Company obtained a contract to build a baseball stadium in Lakewood for $3,300,000. The stadium was to be built at a total cost of $2,700,000 and was scheduled for completion by September 1, 2008. Important information is presented below:

2006 2007 2008

Costs to date 891,000 1,925,000 2,750,000
Estimated costs to complete 1,809,000 825,000 -0-
Progress billings to date 600,000 1,550,000 3,300,000
Cash collected to date 500,000 1,400,000 3,300,000

Required:

a) Using the percentage of completion method, compute the estimated gross profit recognized in the years 2006-2008.

b) Prepare a partial balance sheet for December 31, 2007, showing the balances in the accounts receivable and construction in process inventory account.

Please show all work for a better understanding of this material.

© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/accounting/revenue-recognition-7dsa