Question

Bridgeport, Inc. began work on a $7,043,000 contract in 2020 to construct an office building. During 2020, Bridgeport, Inc. incurred costs of $1.891,800, billed its customers for $1,315,000, and collected $939,000. At December 31, 2020. the estimated additional costs to complete the project total $3,363.200. Prepare Bridgeport's 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "No entry" for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit Construction in Process 1891800 Materials, Cash, Payables 1891800 (To record costs incurred.) Accounts Receivable 1315000 Billings on Construction in Process 1315000 (To record billings.) Cash 939000 Accounts Receivable 939000 (To record collections.) Construction in Process Construction Expenses 1891800 Revenue from Long-Term Contracts (To recognize revenue.)

Answer 1

Account	Debit	Credit
Construction in progress	643,680
Construction expense	1,891,800
Revenue from long-term contracts		2,535,480
Construction in progress
[ revenue recognized]

Revenue for the year = contract amount X Costs incurred/ (costs incurred + estimated costs to complete)

= $7,043,000 X $1,891,800 / ($1,891,800 + $3,363,200 = $2,535,480

Gross profit = revenue - expense = $2,535,480 - $1,891,800 = $643,680 (debited to construction in progress)

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