Question

During 2017, Larkspur Company started a construction job with a contract price of $1,610,000. The job was completed in 2019. The following information is available. 2017 2018 2019 Costs incurred to date $405,900 $766,500 $1,076,000 Estimated costs to complete 584,100 328,500 –0– Billings to date 300,000 893,000 1,610,000 Collections to date 267,000 809,000 1,435,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2017 $ Gross profit recognized in 2018 $ Gross profit recognized in 2019 $

Answer 1

Ref	Particulars	2017	2018	2019
a	Cost incurred during the year	$             405,900	$             360,600	$             309,500
A	Cumulative costs incurred till date	$             405,900	$             766,500	$         1,076,000
b	Estimated costs to complete as of year end	$             584,100	$             328,500	$                        -
B= A+b	Total cost of completing the contract	$             990,000	$         1,095,000	$         1,076,000
Ref	Particulars	2017	2018	2019
C=A/B	Percentage completion	41.00%	70.00%	100.00%
D	Contract amount	$         1,610,000	$         1,610,000	$         1,610,000
E=C*D	Revenue earned till date	$             660,100	$         1,127,000	$         1,610,000
F	Revenue already recognised	$                        -	$             660,100	$         1,127,000
G=E-F	Revenue for the year	$             660,100	$             466,900	$             483,000
H= G-a	Gross profit	$             254,200	$             106,300	$             173,500