Long Term Construction Contracts The Rice Company signed a contract to build a dam over a period of three years for a price of $10,000,000. Information relating to the performance of the contract is summarized as follows:
|
2007 |
2008 |
2009 |
|
|
Construction costs incurred during the year |
$2,000,000 |
$4,000,000 |
$6,000,000 |
|
Estimated costs to complete |
6,000,000 |
6,000,000 |
— |
|
Billings during the year |
1,500,000 |
3,500,000 |
5,000,000 |
|
Collections during the year |
1,300,000 |
3,600,000 |
5,100,000 |
Required
Prepare journal entries for all three years under (1) the percentage of completion method, and (2) the completed contract method.