Question

2. SMI, Inc. hired Johnson Paving to resurfice its racetrax in Bristol, TN. The project was expected to last two years. Contract Price 2,200,000 2012 2013 640,000 1,425,000 960,000 420,000 1,680,000 Actual Yearly Costs Budget Invoices sent Payments received350,000 1,500,000 Compute all he applicablejpoumal enfies for 2012 and 2013 using the completed contract method (check figure: gross margin/profit for the construction project 135,000)

Answer 1

Solution General Journal Debit Credit Date 2012 Construction in 640,000 ress Cash 640,000 To record construction expenses) Accounts receivable 2012 420,000 Billings on construction contract 420,000 To record progressive billings) Cash 2012 350,000 Accounts receivable 350,000 To record collection) General Journal Debit Credit Date Construction in 1,425,000 ress Cash 1425000 To record construction expenses) Accounts receivable 2013 1,680,000 Billings on construction contract 1,680,000 To record progressive billin Cash 2013 Accounts receivable 1,500,000 To record collection 2013 Construction in 135,000 ress Construction expense 2,065,000 Construction revenue 2,200,000 To recognize revenue and expenses) Note: At the end of year 2013, the final invoicing of $100,000 is pending. Once the final invoice is made, balance lying under account 'Construction in Progress' shall be adjusted against 'Billing on construction contract' account.