Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used

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Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used

Chance Company – percentage of completion method –

Description
described below

The Question

On March 1, 2010, Chance Company entered into a contract to

build an apartment building. It is estimated that the building will cost $2,000,000

and will take 3 years to complete. The contract price was $3,000,000.,The information that follows pertains to the construction

period:,

(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used

(b) Prepare all necessary journal entries for 2012.,

 

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