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III. Stackum and Buildum Construction Co. received a contract for $6,500,000 to build an addition to Gama's manufacturing facility. The contract starts in January of 2020 and is complete by December of 2022. The following data was accumulated during the life of the contract:

III. Stackum and Buildum Construction Co. received a contract for $6,500,000 to build an addition to Gama's manufacturing facility. The contract starts in January of 2020 and is complete by December of 2022. The following data was accumulated during the life of the contract:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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III. Stackum and Buildum Construction Co. received a contract for $6,500,000 to build an addition to Gama's manufacturing facility. The contract starts in January of 2020 and is complete by December of 2022. The following data was accumulated during the life of the contract: Cost to date Estimated cost to complete Billings to date Collections to date 2020 2021 1,800,000 3,100,000 2,700,000 1,900,000 2,000,000 4,000,000 6,000,000 1,500,000 3,500,000 6,000,000 2022 5,600,000 0 Stackum and Buildum uses the Percentage-of Completion method to account for contracts of this size. A. Prepare a gross profit analysis for 2020, 2021, and 2022. B. Prepare the entries necessary to account for this contract for the year of 2020
Transcribed Image Text:III. Stackum and Buildum Construction Co. received a contract for $6,500,000 to build an addition to Gama's manufacturing facility. The contract starts in January of 2020 and is complete by December of 2022. The following data was accumulated during the life of the contract: Cost to date Estimated cost to complete Billings to date Collections to date 2020 2021 1,800,000 3,100,000 2,700,000 1,900,000 2,000,000 4,000,000 6,000,000 1,500,000 3,500,000 6,000,000 2022 5,600,000 0 Stackum and Buildum uses the Percentage-of Completion method to account for contracts of this size. A. Prepare a gross profit analysis for 2020, 2021, and 2022. B. Prepare the entries necessary to account for this contract for the year of 2020
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