Macro Tech Enters a Contract on January 1, 2019 to Produce

question 26

Essay

Macro Tech enters a contract on January 1, 2019 to produce software for a customer for $5,000,000. Macro Tech receives $2,000,000 from the customer upon contract signing and the balance at the completion of the contract. According to the contract, the customer controls the system during the creation of the program. Macro Tech estimates that it will take two years to complete the project and uses the number of labor hours to estimate the rate of completion. Macro Tech spends 30,000 hours in the first year of the contract and another 20,000 hours the second year.
Required:
Prepare the entries recorded by Macro Tech over the life of this contract. Assume that all payments are complete by the end of 2020.

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Definitions:

Competitive Advantage

The attributes or circumstances that allow an organization to produce goods or services more effectively than its competitors.

Strategy

A plan of action designed to achieve a long-term or overall aim.

Well-written Goals

Objectives that are clearly defined, achievable, measurable, relevant, and time-bound, enhancing focus and direction.

Components

The individual parts or elements that make up a larger system, product, or assembly.