Superb Professors

***PLEASE EXPLAIN YOUR ANSWERS***
Question 8:
Springer Construction Company contracted to construct a factory building for Douglas Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by October 31, 2018. The annual contract costs incurred, estimated costs to complete the contract and the accumulated billings to Douglas for 2016, 2017, and 2018 are given below:
2016
2017
2018
Costs Incurred to date
2,880,000
6,100,000
7,200,000
Estimated costs to complete the contract
4,320,000
1,100,000
        –  
Billings to Douglas during year
3,200,000
3,500,000
1,700,000 (6 points) Using the percentage of completion method of revenue recognition, how much gross profit or loss will be recognized in 2017? (2 points) Using the completed contract method of revenue recognition, how much gross profit or loss will be recognized in 2017? (4 points) Make the journal entry to record the income (loss) for 2017 on Springer 's books.

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