Homework answers / question archive / Jacks Contractors received a contract to construct a mental health facility for $2,500,000

Jacks Contractors received a contract to construct a mental health facility for $2,500,000

Business

Share With

Jacks Contractors received a contract to construct a mental health facility for $2,500,000.

Construction was begun in 2005 and completed in 2006. Cost and other data are presented below:
2005 2006
Costs incurred during the year $1,500,000 $1,300,000
Remaining estimated costs to complete 1,200,000 0
Billings during the year 1,200,000 1,300,000
Cash collections during the year 1,000,000 1,500,000

Assume that Jacks uses the percentage-of-completion method for revenue recognition.

Compute the amount of gross profit recognized during 2005 and 2006.