Recording Long-Term Construction: Recognize Revenue at a Point in Time and Over TimeWatson Construction Company contracted to build a plant for $500,000. Construction started in January 2020 and was completed in November 2021. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. 20202021Costs incurred during year$290,000$120,000Estimated additional costs to complete125,0000Billings during year270,000230,000Cash collections during year250,000250,000Revenue Recognized at a Point in TimeRevenue Recognized Over Timea. Provide the 2020 and 2021 journal entries for Watson assuming revenue is recognized at a point in time. Provide entries for (1) construction costs incurred, (2) progress billings, (3) cash collections, and (4) revenues and expenses.Note: If a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). DateAccount NameDr.Cr.2020 (1)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer Cash, Payables, etc.AnswerAnswer2020 (2)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2020 (3)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2020 (4)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record revenue from contract. AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record cost of contract. 2021 (1)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer Cash, Payables, etc.AnswerAnswer2021 (2)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2021 (3)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2021 (4)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record revenue from contract. AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record cost of contract.

Given information is: Watson Construction Company contracted to build a plant for $500,000.…

Answered: Provide the 2020 and 2021 journal…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Recording Long-Term Construction: Recognize Revenue at a Point in Time and Over Time

Watson Construction Company contracted to build a plant for $500,000. Construction started in January 2020 and was completed in November 2021. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow.

	2020	2021
Costs incurred during year	$290,000	$120,000
Estimated additional costs to complete	125,000	0
Billings during year	270,000	230,000
Cash collections during year	250,000	250,000

Revenue Recognized at a Point in Time
Revenue Recognized Over Time

a. Provide the 2020 and 2021 journal entries for Watson assuming revenue is recognized at a point in time. Provide entries for (1) construction costs incurred, (2) progress billings, (3) cash collections, and (4) revenues and expenses.

Note: If a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).

Date	Account Name	Dr.	Cr.
2020 (1)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	Cash, Payables, etc.	Answer	Answer
2020 (2)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2020 (3)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2020 (4)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record revenue from contract.
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record cost of contract.
2021 (1)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	Cash, Payables, etc.	Answer	Answer
2021 (2)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2021 (3)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2021 (4)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record revenue from contract.
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record cost of contract.

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Provide the 2020 and 2021 journal entries for Watson assuming revenue is recognized at a point in time. Provide entries for (1) construction costs incurred, (2) progress billings, (3) cash collections, and (4) revenues and expenses. Note: If a journal entry isn't