This is not homework; this is from CAPE Accounting Unit 2--2004-2006 past papers. I am thinking of going evening classes to pursue accounting so i bought this book, i am trying some of the problems but I cant understand how to begin with this, there are no examples.
Brown Construction Company uses the percentage-of-completion method for long-term construction contracts. A specific job was begun in 2004 and completed in 2006. The contract price was $1,400,000, and cost information as of each year-end is given below:
End of year estimated cost to complete .2004.$400,000 2005.$200,000 2006.$ 0
Annual cost incurred .2004.400,000 .20005.400,000 ..2006.120,000
Assuming Brown correctly recorded gross profit in 2004, how much gross profit should the company record in 2005?
Can anyone please help me out.