Ex. 18-109—Journal entries—percentage-of-completion.

Grant Construction Company was awarded a contract to construct an interchange at the junction of U.S. 94 and Highway 30 at a total contract price of $8,000,000. The estimated total costs to complete the project were $6,000,000.

Instructions

(a)Make the entry to record construction costs of $3,600,000, on construction in process to date.

(b)Make the entry to record progress billings of $2,000,000.

(c)Make the entry to recognize the profit that can be recognized to date, on a percentage-ofcompletion basis.

Ex. 18-110—Percentage-of-completion method.

Garnet Construction Co. contracted to build a bridge for $5,000,000. Construction began in 2007 and was completed in 2008. Data relating to the construction are:

2007       2008

Costs incurred $1,650,000 $1,375,000

Estimated costs to complete 1,350,000 —

Garnet uses the percentage-of-completion method.

Instructions

(a)How much revenue should be reported for 2007?  Show your computation.

(b)Make the entry to record progress billings of $1,650,000 during 2007.

(c)Make the entry to record the revenue and gross profit for 2007.

(d)How much gross profit should be reported for 2008?  Show your computation.

 

 

Place New Order
It's Free, Fast & Safe

"Looking for a Similar Assignment? Order now and Get a Discount!