60.1K

Verified Solution

Link Copied!

Curtiss Construction Company, Inc, entered into a fixed-price contract with Axelrod Associates on July 1, 2021, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $5,000,000. Curtiss concludes that the contract does not qualify for revenue recognition over time. The building was completed on December 31, 2023.

Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows.

Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2021, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $5,000,000. Curtiss concludes that the contract does not qualify for revenue recognition over time. The building was completed on December 31, 2023. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows. Required: 1. For each of the three years, (a) prepare a schedule to compute total gross profit or loss to be recognized as a result of this contract and (b) prepare the appropriate journal entries in general journal form. Also, compute the amount to be shown in the balance sheet at the end of 2021 and 2022 as either cost in excess of billings or billings in excess of costs. 2. For each of the three years, assuming Curtiss recognizes revenue over time according to percentage of completion, (a) compute gross profit or loss to be recognized in each of the three years and (b) prepare the appropriate journal entries in general journal form. Also, compute the amount to be shown in the balance sheet at the end of 2021 and 2022 as either cost in excess of billings or billings in excess of costs

Answer & Explanation Solved by verified expert

See Answer