A company signs a contract to deliver goods over 3 years. The total contract price...
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Accounting
A company signs a contract to deliver goods over 3 years. The total contract price is $900,000, and the cost to complete the contract is estimated at $600,000. The following data is available:
Year | Revenue Recognized | Costs Incurred |
1 | $300,000 | $200,000 |
2 | $300,000 | $250,000 |
3 | $300,000 | $150,000 |
(a) Calculate the percentage of completion for each year. (b) Determine the gross profit for each year. (c) Prepare the journal entries for revenue recognition. (d) Discuss the impact of revenue recognition on financial statements.
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