Hardhat Construction Company has a contract to construct a $4,500,000 bridge at an estimated cost of $4,000,000. The contractis to start in July 2014, and the bridge is to be completed in October 2016. The following data pertain to the construction period. 2014 2015 2016 Costs to date $1,000,000 3,000,000 900,000 $2,916,000 1,134,000 2,400,000 1,750,000 $4,050,000 Estimated costs to complete Progress billings during the year Cash collected during the year 1,200,000 2,000,000 750,000 Record the journal entries for 2014, 2015, and 2016 using the percentage of completion method Record the income statement and balance sheet for 2014, 2015, and 2016

Hardhat Construction Company has a contract to construct a $4,500,000 bridge at an estimated cost of $4,000,000. The contractis to start in July 2014, and the bridge is to be completed in October 2016. The following data pertain to the construction period. 2014 2015 2016 Costs to date $1,000,000 3,000,000 900,000 $2,916,000 1,134,000 2,400,000 1,750,000 $4,050,000 Estimated costs to complete Progress billings during the year Cash collected during the year 1,200,000 2,000,000 750,000 Record the journal entries for 2014, 2015, and 2016 using the percentage of completion method Record the income statement and balance sheet for 2014, 2015, and 2016

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

Hardhat Construction Company has a contract to construct a $4,500,000 bridge at
an estimated cost of $4,000,000. The contract is to start in July 2014, and the
bridge is to be completed in October 2016. The following data pertain to the
construction period.
2014
2015
2016
Costs to date
$1,000,000
3,000,000
900,000
$2,916,000
1,134,000
2,400,000
1,750,000
$4,050,000
Estimated costs to complete
Progress billings during the year
Cash collected during the year
1,200,000
2,000,000
750,000
Record the journal entries for 2014, 2015, and 2016 using the percentage of
completion method
Record the income statement and balance sheet for 2014, 2015, and 2016

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