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On January 1, 2020, Red Sox Construction Ltd. started a construction project for $ 4,500,000. Relevant data for 2020 and 2021 are as follows:
2020 2021
Current year construction costs $ 3,300,000 $ 620,000
Estimated remaining costs to complete 600,000 -0-
Current year billings 3,100,000 1,400,000
Current year collections 3,000,000 1,050,000
Instructions
Calculate the following amounts using the percentage of completion method. Please round all your answers to the nearest dollar:
- The amount of revenue recognized using the percentage completion method for 2020 and 2021. (3 marks)
- The amount of gross profit for 2020 and 2021. (4 marks)
- The year-end balance of Construction Contract Asset (Liability) for 2020 and 2021. (3 marks)
- The year-end balance of Accounts Receivable for 2020 and 2021. (2 marks)
Answer & Explanation
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