Bell Company constructs office buildings. Because they can reasonably estimate t

Question

Bell Company constructs office buildings. Because they can reasonably estimate the costs to completion, they use the percentage of completion method to record revenue. At the beginning of 2010, they began construction on an office building in downtown Indianapolis that will take them three years to complete. The contract was for $31,500,000. In a spreadsheet, please show all the journal entries to record the activities for all three years. Please show the balance of the construction in progress and billings on construction in progress for each of the three years. Will they be reported as a net current asset or current liability recorded on the balance sheet for each year? Please describe in paragraph form how your journal entries would change for all three years if Bell Company used the completed contract method instead of the percentage of completion method

Explanation / Answer

Bell Company constructs office buildings. Because they can reasonably estimate t

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