Buildit Corp. was contracted to construct a building for $2,440,000. The contract provided for progress payments. Buildit's accounting year ends 31 December. Work began under the contract on 1 March 20X3, and was completed on 30 November 20X5. Construction activities are summarized below by year: 20x3 20x4 20x5 Construction costs incurred during the year, $610,000; estimated costs to complete, $1,110,000; progress billings during the year, $520,000; and collections, $430,000. Construction costs incurred during the year, $980,000; estimated costs to complete, $350,000; progress billing during the year, $1,690,000; and collections, $1,430,000. Construction costs incurred during the year, $330,000. Because the contract was completed, the remaining balance was billed and later collected in full. per the contract. Required: 1. Prepare Buildit's journal entries to record these events. Assume that percentage of completion is measured by the ratio of costs incurred to date divided by total estimated construction costs. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar. Enter answer in thousands, not in million or in whole Canadian dollars.)
Buildit Corp. was contracted to construct a building for $2,440,000. The contract provided for progress payments. Buildit's accounting year ends 31 December. Work began under the contract on 1 March 20X3, and was completed on 30 November 20X5. Construction activities are summarized below by year: 20x3 20x4 20x5 Construction costs incurred during the year, $610,000; estimated costs to complete, $1,110,000; progress billings during the year, $520,000; and collections, $430,000. Construction costs incurred during the year, $980,000; estimated costs to complete, $350,000; progress billing during the year, $1,690,000; and collections, $1,430,000. Construction costs incurred during the year, $330,000. Because the contract was completed, the remaining balance was billed and later collected in full. per the contract. Required: 1. Prepare Buildit's journal entries to record these events. Assume that percentage of completion is measured by the ratio of costs incurred to date divided by total estimated construction costs. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar. Enter answer in thousands, not in million or in whole Canadian dollars.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 18RE
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Transcribed Image Text:2. Provide the balances that would appear on the income statement and balance sheet for this contract for each year. (Negative
amounts should be indicated by a minus sign.)
Statement of Financial Position:
Current assets:
Inventory (or Liability)
Income statement:
20X3
20X4
20X5
Transcribed Image Text:Buildit Corp. was contracted to construct a building for $2,440,000. The contract provided for progress payments. Buildit's accounting
year ends 31 December. Work began under the contract on 1 March 20X3, and was completed on 30 November 20X5. Construction
activities are summarized below by year:
20x3
20x4
20X5
Construction coats incurred during the year, $610,000; estimated costs to
complete, $1,110,000; progress billings during the year, $520,000; and
collections, $430,000.
Construction costs incurred during the year, $980,000; estimated costs to
complete, $350,000; progress billing during the year, $1,690,000; and
collections, $1,430,000.
Construction costs incurred during the year, $330,000. Because the contract
was completed, the remaining balance was billed and later collected in full
per the contract.
Required:
1. Prepare Buildit's journal entries to record these events. Assume that percentage of completion is measured by the ratio of costs
incurred to date divided by total estimated construction costs. (If no entry is required for a transaction/event, select "No journal
entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole
dollar. Enter answer in thousands, not in million or in whole Canadian dollars.)
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