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Question 1(20 marks) Sunshine Construction Company Limited engaged in a construction project. The project...

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Accounting

Question 1(20 marks)
Sunshine Construction Company Limited engaged in a construction project. The project was
begun in 2022 and completed in 2025 with contract price of $2,000,000. Cost and other data
relating to the project was presented below:
Assume that the Company uses the PERCENTAGE-OF-COMPLETION METHOD for
revenue recognition. The Company's financial year-end is 31 December.
Required: (Answers should be rounded to two decimal places if necessary)
(a) Calculate the gross profits (losses) recognized for the financial years 2022,2023,2024 and
2025, respectively. (Show your workings clearly)
(4 marks)
(b) Prepare the journal entries necessary to record the above information on the Company's
books during 2024.
(9 marks)
(c) Prepare an extracted Statement of Financial Position for 2024 showing items related to
this long-term construction project.
(3 marks)
(d) Compute the gross profits (losses) recognized for the financial years 2022,2023,2024 and
2025, assuming the company uses the COST RECOVERY METHOD to account for the
long-term contract.
(4 marks)
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