On June 15. 2018, Sanderson Construction entered into a long-term construction c

Question

On June 15. 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C. for $220 million. The expected completion date is April 1.2020. just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows (S in millions ): Costs incured during the year Estimated costs to complete as of December 31 2018 540 120 2019 $80 60 2020 $50 TASK: Please - make the journal entries to record Sanderson Construction activity for 2019 TIPI > show C-I-P T-account LP 208 GP 20l9 GP CIP- CASH

Explanation / Answer

IN million $ 2018 Cost incurred 40 Total estimated cost (40+120) 160 Contract price 220 Total Gross profit 60 % Percentage completion (40/160 *100) 25.00% Gross Profit receognized in Year 2018(60*25%) 15 Contract Expense during 2018 40 Conttract revenue 55 2019 Cost incurred 80 Total estimated cost (40+80+60) 180 Contract price 220 Gross Profit 40 % Percentage completion (120/180*100) 66.67% Gros Profit to be recognized in 2019(40*66.67%-15) 12 Contract Expense during 2017 80 Conttract revenue 92 2020 Cost incurred 50 Total estimated cost 170 Contract price 220 Total gross Profit 50 % Percentage completion 100.00% Gross Profit to be recognized in 2020(50-12-15) 23 Contract Expense during 2018 50 Conttract revenue 73 Journal entries Dr IN $ Cr in $ 2019 (in Million) (in Million) Contract in process Dr 80 Acounts payable Cr.' 80 Accounts receivable Dr. Not given Progress Billing Cr. Not given Cash Account Dr. Not given Accounts receivable Cr Not given Contract Expense Dr. 80 Contract in process (with gross profit) 12 Contract Revenue Cr. 92

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