Community Apartments Inc Required:
A B Determine the Performance That Would Be Reported Under the a Contract

Community Apartments Inc. (CA Inc.)is building a luxury condominium for a contract price of $68,000,000. This is estimated to be a three-year project with an estimated cost of $54,000,000. CA Inc. uses the percentage-of-completion method of revenue recognition, using the cost-to-cost method of estimating the percentage complete. The following is the best available information at the end of each year:
$$\begin{array} { | l | l | l | l | } \hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } \\\hline \text { Eosts incurred each year } & 9,000 & 31,500 & 20,000 \\\hline \text { Estimated costs to complete } & 51,000 & 27,000 & 9 \\\hline \text { Gilling } & 8,000 & 34,500 & 25,500 \\\hline \text { Follections } & 7,000 & 28,500 & 32,500 \\\hline\end{array}$$ Required:
a. Compute the amount of gross profit to be recognized in Year 1, Year 2, and Year 3. Show computations in tabular form provided below:
$$\begin{array} { | l | l | l | l | } \hline & \underline { \text { Year 1 } } & \underline { \text { Year 2 } } & \underline { \text { Year 3 } } \\\hline \text { Cost incurred to date } & & & \\\hline \text { Estimated cost to complete } & & & \\\hline \text { Estimated total cost } & & & \\\hline \text { Contract price } & & & \\\hline \text { Estiruated grass prafit } & & & \\\hline \text { Eramplete } & & & \\\hline \text { Grass prafit ta date } & & & \\\hline \text { Current previess prafit } & & & \\\hline\end{array}$$ b. Determine the performance that would be reported under the cash basis and accrual basis of accounting for Year 1 of this company. Explain how revenues are matched with expenses when the percentage of completion basis is used.
c. Complete the PARTIAL Balance Sheet for Year 1
Current assets
Current Liabilities