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 of Year 1 and was completed in November of Year 2. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. As of December 31 Year 1 Year 2 Costs incurred $290,000 $120,000 Estimated costs to complete 125,000 Billings 270,000 230,000 Cash collections 250,000 250,000 Required Point in Time Over Time a. Provide the Year 1 and Year 2 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 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). Year 1 Account Name Dr. Cr. 1. To record constructions costs incurred 2. To record progress billings 3. To record collections 4. To recognize revenues To recognize expenses Year 2 Account Name Dr. Cr. 1. To record constructions costs incurred 2. To record progress billings 3. To record collections 4. To recognize revenues To recognize expenses

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

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 of Year 1 and was completed in November of Year 2. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. As of December 31 Year 1 Year 2 Costs incurred $290,000 $120,000 Estimated costs to complete 125,000 Billings 270,000 230,000 Cash collections 250,000 250,000 Required Point in Time Over Time a. Provide the Year 1 and Year 2 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 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). Year 1 Account Name Dr. Cr. 1. To record constructions costs incurred 2. To record progress billings 3. To record collections 4. To recognize revenues To recognize expenses Year 2 Account Name Dr. Cr. 1. To record constructions costs incurred 2. To record progress billings 3. To record collections 4. To recognize revenues To recognize expenses

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 8 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions