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.
(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:
Costs incurred $1,650,000 $1,375,000
Estimated costs to complete 1,350,000 —
Garnet uses the percentage-of-completion method.
(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.