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Business
Accounting
2020 2021 2022 Costs for the year $3,800 4,600 1.150 Estimated costs to complete 4,600 1,220 -0- Progress billings for the year (non-refundable) 3,400 4.100 2,500 Cash collected for the year 3,100 4,150 2,750

2020 2021 2022 Costs for the year $3,800 4,600 1.150 Estimated costs to complete 4,600 1,220 -0- Progress billings for the year (non-refundable) 3,400 4.100 2,500 Cash collected for the year 3,100 4,150 2,750

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Blossom Enterprises Ltd. has entered into a contract beginning in February 2020 to build two warehouses for Atlantis Structures Ltd. The contract is a non-cancellable fixed price contract for $10.0 million. The following data pertain to the construction period (all figures in thousands). Costs for the year Estimated costs to complete Progress billings for the year (non-refundable) Cash collected for the year Gross profit/(loss) $ eTextbook and Media List of Accounts Account Titles and Explanation (To record cost of construction) The construction industry has experienced significant expansion, making construction materials and labour more costly than originally estimated. Blossom finds it extremely difficult to estimate the costs to complete construction and therefore difficult to estimate the percent complete. It must account for the construction project using the zero-profit method. (To record progress billings) Calculate the amount of the gross profit to be recognized each year of the contract. (Do not leave any answer field blank. Enter O for amounts. Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45).) 2020 (To record collections) 2020 (To record revenues) 2021 (To record construction expenses) $3,800 4,600 4,600 1,220 3,400 4.100 2,500 3,100 4,150 2022 $ 1,150 Prepare the journal entries for 2020 and 2021. (Use Materials, Cash, Payables for costs incurred to date.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) For Year 2020: -0- 2,750 2021 2022 Debit Credit
Transcribed Image Text:Blossom Enterprises Ltd. has entered into a contract beginning in February 2020 to build two warehouses for Atlantis Structures Ltd. The contract is a non-cancellable fixed price contract for $10.0 million. The following data pertain to the construction period (all figures in thousands). Costs for the year Estimated costs to complete Progress billings for the year (non-refundable) Cash collected for the year Gross profit/(loss) $ eTextbook and Media List of Accounts Account Titles and Explanation (To record cost of construction) The construction industry has experienced significant expansion, making construction materials and labour more costly than originally estimated. Blossom finds it extremely difficult to estimate the costs to complete construction and therefore difficult to estimate the percent complete. It must account for the construction project using the zero-profit method. (To record progress billings) Calculate the amount of the gross profit to be recognized each year of the contract. (Do not leave any answer field blank. Enter O for amounts. Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45).) 2020 (To record collections) 2020 (To record revenues) 2021 (To record construction expenses) $3,800 4,600 4,600 1,220 3,400 4.100 2,500 3,100 4,150 2022 $ 1,150 Prepare the journal entries for 2020 and 2021. (Use Materials, Cash, Payables for costs incurred to date.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) For Year 2020: -0- 2,750 2021 2022 Debit Credit
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