HuskiesBest Construction Company began work on a $420,000 construction contract in 2020. During 2020, HuskiesBest incurred costs of $278,000, billed its customer for $215,000, and collected $175,000. At December 31, 2020, the estimated additional costs to complete the project total $162,000. Prepare HuskiesBest 's journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method.

HuskiesBest Construction Company began work on a $420,000 construction contract in 2020. During 2020, HuskiesBest incurred costs of $278,000, billed its customer for $215,000, and collected $175,000. At December 31, 2020, the estimated additional costs to complete the project total $162,000. Prepare HuskiesBest 's journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method.

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

HuskiesBest Construction Company began work on a $420,000 construction contract in 2020. During 2020, HuskiesBest incurred costs of $278,000, billed its customer for $215,000, and collected $175,000.
At December 31, 2020, the estimated additional costs to complete the project total $162,000.
Prepare HuskiesBest 's journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method.

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