Reminder: You only pick one
A)
The periodic and
the perpetual inventory systems are two methods that companies use to account
for inventories. Briefly describe the major features of each system and explain
why a physical inventory is necessary under both systems.
A) Bodley
Construction Company is under contract to perform extensive renovations on a
large office complex. Bodley signed the
contract for a total of $6 million and expected the renovations to cost $4
million. Renovations began in January, 2001 and were finished in December 2003.
Actual construction costs incurred were:
2001$ 560,000
2002 1,440,000
a.
2003 2,000,000
Instructions
(a) Calculate the revenue to be recognized in each year using the
percentage-of-completion method.
(b) What amount of gross profit was recognized in 2002?
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