On January 1, Miller Construction Company contracted to build a parking lot for the city of St. Louis for $1,125,000. The following transactions and estimates relate to this contract. Construction costs incurred during 2020 $600,000 Progress billings $285,000 Cash collections $262,500 Estimated costs to complete $600,000 Required a. Prepare the journal entry to record profit or loss assuming revenue is recognized over time. •Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). Account Name Cost of Construction Revenues from Long-Term Contracts Construction in Process To recognize revenues and expenses N/A-Debit Account Name Dr. 600,000 N/A Credit To recognize revenues and expenses b. Prepare the journal entry to record profit or loss assuming revenue is recognized at a point in time. •Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). 0 0 Dr. Cr. 0 0 0 x 562,500 ✓ 37,500 * Cr. 0 x 0 x

On January 1, Miller Construction Company contracted to build a parking lot for the city of St. Louis for $1,125,000. The following transactions and estimates relate to this contract. Construction costs incurred during 2020 $600,000 Progress billings $285,000 Cash collections $262,500 Estimated costs to complete $600,000 Required a. Prepare the journal entry to record profit or loss assuming revenue is recognized over time. •Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). Account Name Cost of Construction Revenues from Long-Term Contracts Construction in Process To recognize revenues and expenses N/A-Debit Account Name Dr. 600,000 N/A Credit To recognize revenues and expenses b. Prepare the journal entry to record profit or loss assuming revenue is recognized at a point in time. •Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). 0 0 Dr. Cr. 0 0 0 x 562,500 ✓ 37,500 * Cr. 0 x 0 x

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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Fender Construction Company receives a contract to construct a building over a period of 3 years for a price of $700,000. The contract represents a single performance obligation that will be satisfied over time. Information relating to the performance of the contract is summarized as follows: 2019 2020 2021 Construction costs incurred during the year $150,000 $242,000 $168,000 Estimated costs to complete 350,000 168,000 — Billings during the year 120,000 250,000 330,000 Collections during the year 100,000 260,000 340,000 Required: 1. Prepare journal entries for all 3 years. 2. Assume that the contract represents a single performance obligation that will be satisfied at a point in time. Prepare journal entries for all 3 years. 1. Assume the contract represents a single performance obligation that will be satisfied over time. Prepare journal entries on December 31 for all 3 years -to record costs of construction for cash -to record partial…
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