Answered: 2023 Account Titles and Explanation |…

2023 Account Titles and Explanation | (To record contract expenses) (To record collections) (To record construction expense) (To record revenues) Debit Credit

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.3E

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Question

On January 1, 2023, Cullumber Corp., a management consulting frm, entered into a contract with Viking Company to provide
advisory services over a four-year period. The contract price was $4,080,000 and was to be paid in four equal annual payments at
the end of each year. Cullumber's expenses relating to this contract were $663,000, $744,600, $795,600 and $724,200 for 2023-
2026. Collectibility was reasonably assured throughout the duration of the contract and measurement uncertainties were NOT an
issue.
Using the contract-based revenue recognition model, prepare journal entries for all four years.

2023

2024

2025

2026

2023
Account Titles and Explanation
|
(To record contract expenses)
(To record collections)
(To record construction expense)
(To record revenues)
Debit
Credit

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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