Posted by Cindy on .
In 2002, construction work began on a three-year contract at a price of $7,525,000. The firm uses the percentage-of-completion method of financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to the total estimated costs for completing the contract. The financial statement presentations relating to this contract on December 31, 2002, are
Accounts Receivable $150,500
Construciton in progress $602,000
Less progress billings 562,000
Gross profit on construct. contracts $310,000
a. Cash collected in 2002
b. Esitmated income on the construction contract