WEIS Construction Company uses the percentage-of-completion method of accounting. In 2020, WEIS began work under contract #E2-D2, which provided for a contract price of $2,187,000. Other details follow: 2020 2021 Costs incurred during the year $658,560 $1,408,000 Estimated costs to complete, as of December 31 909,440 –0– Billings during the year 421,000 2,187,000 Collections during the year 348,000 1,527,000 (a) What portion of the total contract price would be recognized as revenue in 2020? In 2021? Revenue recognized in 2020 $ 918,540 Revenue recognized in 2021 $ 1,268,460 (b) using the information above, but assuming the company uses the completed-contract method of accounting, what portion of the total contract price would be recognized? Revenue recognized in 2020 $ 0 Revenue recognized in 2021 $ 2,187,000 (c)Prepare a complete set of journal entries for 2020 (using the percentage-of-completion method). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For costs incurred use account Materials, Cash, Payables.)
WEIS Construction Company uses the percentage-of-completion method of accounting. In 2020, WEIS began work under contract #E2-D2, which provided for a contract price of $2,187,000. Other details follow: 2020 2021 Costs incurred during the year $658,560 $1,408,000 Estimated costs to complete, as of December 31 909,440 –0– Billings during the year 421,000 2,187,000 Collections during the year 348,000 1,527,000 (a) What portion of the total contract price would be recognized as revenue in 2020? In 2021? Revenue recognized in 2020 $ 918,540 Revenue recognized in 2021 $ 1,268,460 (b) using the information above, but assuming the company uses the completed-contract method of accounting, what portion of the total contract price would be recognized? Revenue recognized in 2020 $ 0 Revenue recognized in 2021 $ 2,187,000 (c)Prepare a complete set of journal entries for 2020 (using the percentage-of-completion method). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For costs incurred use account Materials, Cash, Payables.)
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 24E
Related questions
Question
E12.
WEIS Construction Company uses the percentage-of-completion method of accounting. In 2020, WEIS began work under contract #E2-D2, which provided for a contract price of $2,187,000. Other details follow:
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2020
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2021
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| Costs incurred during the year | $658,560 | $1,408,000 | ||
| Estimated costs to complete, as of December 31 | 909,440 | –0– | ||
| Billings during the year | 421,000 | 2,187,000 | ||
| Collections during the year | 348,000 | 1,527,000 |
(a) What portion of the total contract price would be recognized as revenue in 2020? In 2021?
| Revenue recognized in 2020 |
$ 918,540
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| Revenue recognized in 2021 |
$ 1,268,460
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(b) using the information above, but assuming the company uses the completed-contract method of accounting, what portion of the total contract price would be recognized?
| Revenue recognized in 2020 |
$ 0
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| Revenue recognized in 2021 |
$ 2,187,000
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(c)Prepare a complete set of
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Account Titles and Explanation
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Debit
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Credit
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(To record cost of of construction.)
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(To record progress billings.)
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(To record collections.)
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(To recognize revenue.)
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