Q2. Percentage-of-completion and completed-contract methods. On February 1, 2010, Marsh Contractors agreed to construct

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Q2. Percentage-of-completion and
completed-contract methods.
On February 1, 2010, Marsh Contractors agreed to construct a
building at a contract price of $6,000,000. Marsh estimated total
construction costs would be $4,000,000 and the project would be
finished in 2012. Information relating to the costs and billings
for this contract is as follows:
2010 2011 2012
Total costs incurred to
date $1,500,000 $2,640,000 $4,600,000
Estimated costs to
complete 2,500,000 1,760,000 -0-
Customer billings to
date 2,200,000 4,000,000 5,600,000
Collections to
date 2,000,000 3,500,000 5,500,000
Instructions
a) Fill in the correct amounts on the following
schedule. Compute the gross profit that should be recorded for
2010, 2011, and 2012 under the percentage-of-completion and
completed-contract accounting method. Show your
calculations.
Percentage-of-Completion Completed-Contract
Gross
Profit Gross
Profit
2010 ___________ 2010 ___________
2011 ___________ 2011 ___________
2012 ___________ 2012 ___________
b) Provide journal entries to record gross profit and
revenue for 2010 and 2011 under the percentage-of-completion
method.