Bigelow Contractors signed a contract to construct a storage facility for RGN Manufacturing, Inc. The fixed- fee contract specifies that the facility is to be completed in three years. Bigelow uses the percentage- of- completion method (cost- to- cost approach) to account for its construction transactions. Information related to this contract is summarized in the table below.
a. Compute the percentage completed for each year.
b. Compute the gross profit and revenue to be recognized each year of the contract.
c. Prepare the journal entries required for each year of the contract.
d. Prepare the t- accounts for Construction in Progress, Billings on Construction in Progress, and Accounts Receivable.
e. Determine the net asset (liability) for each year of the contract on December 31.
This question was answered on: Jul 11, 2017
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