Macro Tech Enters a Contract on January 1,2017 to Produce

question 59

Essay

Macro Tech enters a contract on January 1,2017 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 2018.

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Definitions:

402A

A section of the Restatement (Second) of Torts in the United States, making manufacturers and sellers liable for harm caused by defective products.

Warranty Of Title

A guarantee that the seller has the right to sell the property and that it is free from liens or other encumbrances.

Code

A system of rules to regulate behavior or a set of instructions for a computer.

Article 2A

A provision within the Uniform Commercial Code that deals with leases of personal property, outlining the rights and obligations of lessors and lessees.