Sage Hill Inc. began work on a $10,700,000 non-cancellable contract in 2020 to construct an office building. During 2020, Sage Hill Inc. incurred costs of $1,352,000, billed its customers for $1,200,000 (non-refundable), and collected $910,000. At December 31, 2020, the estimated future costs to complete the project totalled $3,848,000. Prepare Sage Hill's 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indentedwhen the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for theamounts.)Account Titles and ExplanationDebitCredit(To record cost of construction)(To record progress billings)(To record collections)(To record revenues)(To record construction expenses)>>>

Journal entry: It is prepared to record the financial and non financial transaction of the business…

Sage Hill Inc. began work on a $10,700,000 non-cancellable contract in 2020 to construct an office building. During 2020, Sage Hill Inc. incurred costs of $1,352,000, billed its customers for $1,200,000 (non-refundable), and collected $910,000. At December 31, 2020, the estimated future costs to complete the project totalled $3,848,000.

Sage Hill Inc. began work on a $10,700,000 non-cancellable contract in 2020 to construct an office building. During 2020, Sage Hill Inc. incurred costs of $1,352,000, billed its customers for $1,200,000 (non-refundable), and collected $910,000. At December 31, 2020, the estimated future costs to complete the project totalled $3,848,000.

Quickbooks Online Accounting

3rd Edition

ISBN:9780357391693

Author:Owen

Publisher:Owen

Chapter10: Financial Statements And Reports

Section: Chapter Questions

Problem 4.8C

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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

Prepare Sage Hill's 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented
when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the
amounts.)
Account Titles and Explanation
Debit
Credit
(To record cost of construction)
(To record progress billings)
(To record collections)
(To record revenues)
(To record construction expenses)
>
>
>

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