Recognition of Profit and Balance Sheet Presentation, Percentage of Completion On February
1, 2010, Hewitt Construction Company obtained a contract to build an athletic stadium. The stadium was to be built at a total cost of $5,400,000 and was scheduled for completion by September 1, 2012. One clause of the contract stated that Hewitt was to deduct $15,000 from the $6,600,000 billing price for each week that completion was delayed. Completion was delayed 6 weeks, which resulted in a $90,000 penalty Below are the data pertaining to the constructions period.
Instructions
(a) Using the percentage of completion method, compute the estimated gross profit recognized in the years 2010–2012.
(b) Prepare a partial balance sheet for December 31, 2011, showing the balances in the receivable and inventoryaccounts.