Homework Answers
| 2018 | 2019 | 2020 | ||||
| Contract price | $ 1,600,000 | $ 1,600,000 | $ 1,600,000 | |||
| Actual costs to date | $ 224,000 | $ 936,000 | $ 1,280,000 | |||
| Estimated costs | $ 896,000 | $ 264,000 | ||||
| total estimated costs | $ 1,120,000 | $ 1,200,000 | $ 1,280,000 | |||
| Estimated gross profit (loss) | $ 480,000 | $ 400,000 | $ 320,000 | |||
| revenue recognition | ||||||
| 2018:(224000/1120000)= | 20.00% | |||||
| 20%*1600000= | $ 320,000 | |||||
| 2019:(936000/1200000)= | 78.00% | |||||
| (78%*1600000)-320000= | $ 928,000 | |||||
| 2020:1600000-320000-928000 | $ 352,000 | |||||
| Gross profit (loss) recognition: | ||||||
| 2018:320000-224000= | $ 96,000 | |||||
| 2019:928000-(936000-224000)= | $ 216,000 | |||||
| 2020:352000-(1280000-936000)= | $ 8,000 | |||||
| Journal entries | ||||||
| 2018 | 2019 | 2020 | ||||
| Debit | Credit | Debit | Credit | Debit | Credit | |
| Construction in progress | $ 224,000 | $ 712,000 | $ 344,000 | |||
| Various accounts | $ 224,000 | $ 712,000 | $ 344,000 | |||
| Accounts receivable | $ 200,000 | $ 1,200,000 | $ 1,600,000 | |||
| Billings on construction contract | $ 200,000 | $ 1,200,000 | $ 1,600,000 | |||
| Cash | $ 170,000 | $ 1,070,000 | $ 1,500,000 | |||
| Accounts receivable | $ 170,000 | $ 1,070,000 | $ 1,500,000 | |||
| Construction In progress | $ 96,000 | $ 216,000 | $ 8,000 | |||
| Cost of construction | $ 224,000 | $ 712,000 | $ 344,000 | |||
| Revenue from long term contracts | $ 320,000 | $ 928,000 | $ 352,000 | |||
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