General Instructions: You MUST SHOW ALL CALCULATIONS in order to receive full
You MUST complete the exam with no help from classmates or anyone else.
The Brooks’ Construction Company began work on a three year contract in 2005.
price is $4,000,000, and the company uses the percentage-of-completion method.
information relating to the contract is as follows:
Estimated costs to complete at December 31
A. Compute the gross profit or loss to be recognized in 2007.
Round all percents to 4 decimal places.
B. Prepare the following journal entries for the year 2006:
To record cost
To record the billing
To record collection
To record the profit or loss
C. Prepare a partial balance sheet as of year end 2006 for this contract.
D. How much revenue and gross profit would the company recognize in 2007 if it had used the
completed contract method?