Cullumber, Inc. began work on a $7,465,000 contract in 2025 to construct an office building. During 2025, Cullumber, Inc. incurredcosts of $1,720,960, billed its customers for $1,293,000, and collected $1,051,000. At December 31, 2025, the estimated additionalcosts to complete the project total $3,657,040.Prepare Cullumber's 2025 journal entries using the percentage-of-completion method. (Credit account titles are automatically indentedwhen amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "Noentry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)Account Titles and Explanation(To record costs incurred.)(To record billings.)DebitCredit

Step 1: Calculate the Percentage of CompletionThe percentage-of-completion method requires us to…

Answered: Cullumber, Inc. began work on a…

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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Pharoah, Inc. began work on a $6,909,000 contract in 2025 to construct an office building. During 2025, Pharoah, Inc. incurred costs of $1,791,800, billed its customers for $1,174,000, and collected $1,035,000. At December 31, 2025, the estimated additional costs to complete the project total $3,478,200. Prepare Pharoah's 2025 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Construction in Process Materials, Cash, Payables (To record costs incurred.) Accounts Receivable Billings on Construction in Process (To record billings.) cash Accounts Receivable (To record collections.) Construction in Process Construction Expenses Revenue from Long-Term…
Flounder, Inc. began work on a $6,504,000 contract in 2020 to construct an office building. During 2020, Flounder, Inc. incurred costs of $1,639,900, billed its customers for $1,300,000, and collected $1,055,000. At December 31, 2020, the estimated additional costs to complete the project total $3,650,100.Prepare Flounder’s 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Sandhill Inc. began work on a $8,900,000 non-cancellable contract in 2023 to construct an office building. During 2023, Sandhill incurred costs of $1,672,000, billed its customers for $1,450,000 (non-refundable), and collected $900,000. At December 31, 2023, the estimated future costs to complete the project totalled $2,728,000. Prepare Sandhill's 2023 journal entries 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 O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation (To record cost of construction) (To record progress billings) (To record collections) (To record revenues) (To record construction expenses) Debit Credit
Pina, Inc. began work on a $6,759,000 contract in 2020 to construct an office building. During 2020, Pina, Inc. incurred costs of $1,641,860, billed its customers for $1,319,000, and collected $1,054,000. At December 31, 2020, the estimated additional costs to complete the project total $3,187,140.Prepare Pina’s 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record costs incurred enter a debit amount enter a credit amount enter an account title to record costs incurred enter a debit amount enter a credit amount (To record costs incurred.) enter an account title to record billings enter a debit amount enter a…
Novak, Inc. began work on a $ 6,466,000 contract in 2020 to construct an office building. During 2020, Novak, Inc. incurred costs of $ 1,547,340, billed its customers for $ 1,085,000, and collected $ 1,013,000. At December 31, 2020, the estimated additional costs to complete the project total $ 3,003,660.Prepare Novak’s 2020 journal entries using the percentage-of-completion method
Metlock Inc. began work on a $11,300,000 non-cancellable contract in 2020 to construct an office building. During 2020, Metlock Inc. incurred costs of $1,092,000, billed its customers for $1,200,000 (non-refundable), and collected $990,000. At December 31, 2020, the estimated future costs to complete the project totalled $3,108,000.Prepare Metlock’s 2020 journal entries 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.) Account Titles and Explanation Debit Credit enter an account title to record cost of construction No Entry / Contract Asset/Liability / Materials, Cash, Payables / Revenue from Long-Term Contracts / Accounts Receivable / Construction Expenses enter a debit amount enter a credit amount enter an account…
Grouper, Inc. began work on a $6,491,000 contract in 2020 to construct an office building. During 2020, Grouper, Inc. incurred costs of $1,941,020, billed its customers for $1,138,000, and collected $904,000. At December 31, 2020, the estimated additional costs to complete the project total $3,304,980.Prepare Grouper’s 2020 journal entries using the percentage-of-completion method.
Cullumber, Inc. began work on a $7,164,000 contract in 2020 to construct an office building. During 2020, Cullumber, Inc. incurred costs of $1,960,630, billed its customers for $1,255,000, and collected $920,000. At December 31, 2020, the estimated additional costs to complete the project total $3,338,370.Prepare Cullumber’s 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record costs incurred enter a debit amount enter a credit amount enter an account title to record costs incurred enter a debit amount enter a credit amount (To record costs incurred.) enter an account title to record billings enter a debit amount…
Turner, Inc. began work on a $7,000,000 contract in 2020 to construct an office building. During 2020, Turner, Inc. incurred costs of $1,700,000, billed its customers for $1,200,000, and collected $960,000. At December 31, 2020, the estimated additional costs to complete the project total $3,300,000. Prepare Turner's 2020 journal entries using the percentage-of-completion method.
Sage Hill Inc. began work on a $10,700,000 non-cancellable contract in 2020 to construct an office building. During 2020, Sage Hill Inc. incurred costs of $1,352,000, billed its customers for $1,200,000 (non-refundable), and collected $910,000. At December 31, 2020, the estimated future costs to complete the project totalled $3,848,000.
Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,720,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: At 12-31-2024 At 12-31-2025 At 12-31-2026 Percentage of completion 10% 60% 100% Costs incurred to date $ 371,000 $ 3,024,000 $ 5,102,000 Estimated costs to complete 3,339,000 2,016,000 0 Billings to Axelrod, to date 732,000 2,410,000 4,720,000 Required: Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not…
Oriole Construction Company began work on a $420,000 construction contract in 2025. During 2025, Oriole incurred costs of $264, 500, billed its customber for $207,000, and collected $179,500. December 31, 2025, the estimated additional costs to complete the project total $159, 650. Prepare Oriole's journal entry to record profit or loss, if any, using (a) the percentage - of - completion method and (b) the cost-recovery method.

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