Diamond Construction which has a calendar year end, has entered into a non-cancellable fixed priced contract of $4,200,000 beginning May 1, 2019 to build a road for a municipality. It has been estimated that the road will be complete by April 2021. The following data pertains to the construction period: 2019 2020 2021 Costs during the year 1,850,000 1,700,000 500,000 Estimated costs to complete 2,050,000 700,000 - Total Required Assuming the company uses the percentage of completion method based on input, calculate and record the revenue and profit for each year (i.e. prepare only the annual journal entry reporting the revenue / profit for the year).
Diamond Construction which has a calendar year end, has entered into a non-cancellable fixed priced contract of $4,200,000 beginning May 1, 2019 to build a road for a municipality. It has been estimated that the road will be complete by April 2021. The following data pertains to the construction period: 2019 2020 2021 Costs during the year 1,850,000 1,700,000 500,000 Estimated costs to complete 2,050,000 700,000 - Total Required Assuming the company uses the percentage of completion method based on input, calculate and record the revenue and profit for each year (i.e. prepare only the annual journal entry reporting the revenue / profit for the year).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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| Diamond Construction which has a calendar year end, has entered into a non-cancellable fixed priced contract of $4,200,000 beginning May 1, 2019 to build a road for a municipality. | |||||||||||||
| It has been estimated that the road will be complete by April 2021. The following data pertains to the construction period: | |||||||||||||
| 2019 | 2020 | 2021 | |||||||||||
| Costs during the year | 1,850,000 | 1,700,000 | 500,000 | ||||||||||
| Estimated costs to complete | 2,050,000 | 700,000 | - | ||||||||||
| Total | |||||||||||||
| Required | |||||||||||||
| Assuming the company uses the percentage of completion method based on input, calculate and record the revenue and profit for each year (i.e. prepare only the annual |
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