Pensacola Building Co. signed a contract to build a road over a period of three

Question

Pensacola Building Co. signed a contract to build a road over a period of three years for a price of $600,000. Information relating to the performance of the contract in the first two years is summarized below: 2016 2017 Construction costs incurred during the year $110,000 $226,000 Estimated costs to complete 330,000 224,000 Billings during the year (all collected in cash) 100,000 290,000 REQUIRED: a. Prepare the journal entries for 2016 and 2017, assuming that the company uses the percentage of completion method. b. How would the journal entries change if the company used the completed contract method?
Pensacola Building Co. signed a contract to build a road over a period of three years for a price of $600,000. Information relating to the performance of the contract in the first two years is summarized below: 2016 2017 Construction costs incurred during the year $110,000 $226,000 Estimated costs to complete 330,000 224,000 Billings during the year (all collected in cash) 100,000 290,000 REQUIRED: a. Prepare the journal entries for 2016 and 2017, assuming that the company uses the percentage of completion method. b. How would the journal entries change if the company used the completed contract method?
Pensacola Building Co. signed a contract to build a road over a period of three years for a price of $600,000. Information relating to the performance of the contract in the first two years is summarized below: 2016 2017 Construction costs incurred during the year $110,000 $226,000 Estimated costs to complete 330,000 224,000 Billings during the year (all collected in cash) 100,000 290,000 REQUIRED: a. Prepare the journal entries for 2016 and 2017, assuming that the company uses the percentage of completion method. b. How would the journal entries change if the company used the completed contract method?

Explanation / Answer

a. Prepare the journal entries for 2016 and 2017, assuming that the company uses the percentage of completion method.

Debit Credit

Construction in Progress -Cash, Accounts Payable, etc 226,000

Accounts Receivable 226,000

Partial Billings 290,000

Cash 290,000

Construction Expense 226,000

Construction in Progress 16,000

Construction Revenue 210,000

b. How would the journal entries change if the company used the completed contract method?

Debit Credit

Partial Billings 600,000

Construction Revenue 600,000

Construction Expense 556,000

Construction in Progress 556,000

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.