Percentage-Of-Completion Method
Jets Ltd $\text {Costs incurred}\ldots \ldots \ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots \ldots \ldots \ldots\$900,000\quad\$1,700,000$

question 111

Essay

Percentage-of-completion method
Jets Ltd. contracted to build a high-rise for $ 6,000,000. Construction began in 2020 and is expected to be completed in 2020. Data for 2020 and 2021 are:
$\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\underline{2020}\quad\quad\underline{2021}$
$\text {Costs incurred}\ldots \ldots \ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots \ldots \ldots \ldots\$900,000\quad\$1,700,000$
$\text {Estimated costs to complete}\ldots \ldots \ldots \ldots \ldots \ldots \ldots3,600,000\quad2,400,000$ Instructions
Using the percentage-of-completion method and the cost-to-cost basis,
a) How much gross profit should be reported for 2020? Show your calculation.
b) How much gross profit should be reported for 2021? Show your calculation.
c) Prepare the journal entry to record the revenue and gross profit for 2021.

---

Definitions:

Poisson Probability

The probability of a given number of events happening in a fixed interval of time or space when these events occur with a known constant mean rate and independently of the time since the last event.

Binomial Probabilities

The probabilities of achieving a specific number of successes in a fixed number of Bernoulli trials, characterized by only two possible outcomes.

Poisson Random Variable

A variable that follows the Poisson distribution, mainly used to model the number of times an event happens in a fixed interval of time or space.

Discrete Random Variable

A type of random variable that assumes a countable number of distinct values, often representing outcomes of a random process.