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HW 18 - HWCh18 Q1 In 2007 Norcraft Sisters Construction...

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HW Ch18 Q1) In 2007 Norcraft Sisters Construction agreed to construct a residence hall at University of the North at a price of $8,500,000. The information relating to the costs and billings for this contract is shown below. 2006 2007 2008 Costs incurred to date $ 800,000 $4,050,000 $8,950,000 Estimated costs yet to be incurred 7,200,000 4,950,000 –0– Customer billings to date 500,000 4,000,000 8,500,000 Collection of billings to date 200,000 3,200,000 8,000,000 Instructions (a) Assuming that the percentage-of-completion method is used, (1) compute the amount of gross profit to be recognized in 2006, 2007 and 2008 by showing revenue and expense, and (2) prepare journal entries for 2007. (b) For 2007, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement. Q2) In 2007, Landers Construction Corp. began construction work under a 5-year contract. The contract price was $25,000,000. Landers uses the percentage-of-completion method for financial accounting purposes. The income to
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