ACCOUNTING
On March 1, 2007, Winter 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 complete. The contract price was $3,000,000 The information that follows pertains to the construction period:
2007 2008 2009
Costs to date: $600,000 $1,560,000 $2,100,000
Estimated costs to complete: 1,400,000 390,000 0
Progress billing to date: 1,050,000 2,100,000 3,000,000
Cash collected to date: 950,000 1,950,000 2,750,000
Instructions:
(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 2009.
(c) Prepare a partial balance sheet for December 31, 2008, showing the balances in the receivables and inventory accounts.
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