Stoney Run Construction Company (U.S. GAAP) enters into a 3-year contract to build a newwarehouse facility. Information for Years 1, 2, and 3 is shown below:Year 1Year 2Year 3Sale price$2,800,000 $2,800,000 $2,800,000Estimated costs1,600,000 2,000,0002,000,000Costs incurred to date (paid in cash)400,000900,0002,000,000Billed to date250,0001,150,0002,800,000Received in cash to date190,000950,0002,800,000Record the necessary journal entries for Years 1-3.

Journal entry: Journal is a book of prime entry or a book of original entry in which transactions…

Stoney Run Construction Company (U.S. GAAP) enters into a 3-year contract to build a new warehouse facility. Information for Years 1, 2, and 3 is shown below: Year 1 $2,800,000 $2,800,000 $2,800,000 Year 2 Year 3 Sale price Estimated costs 1,600,000 2,000,000 2,000,000 Costs incurred to date (paid in cash) 400,000 900,000 2,000,000 Billed to date 250,000 1,150,000 2,800,000 Received in cash to date 190,000 950,000 2,800,000 Record the necessary journal entries for Years 1-3.

Stoney Run Construction Company (U.S. GAAP) enters into a 3-year contract to build a new warehouse facility. Information for Years 1, 2, and 3 is shown below: Year 1 $2,800,000 $2,800,000 $2,800,000 Year 2 Year 3 Sale price Estimated costs 1,600,000 2,000,000 2,000,000 Costs incurred to date (paid in cash) 400,000 900,000 2,000,000 Billed to date 250,000 1,150,000 2,800,000 Received in cash to date 190,000 950,000 2,800,000 Record the necessary journal entries for Years 1-3.

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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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

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Stoney Run Construction Company (U.S. GAAP) enters into a 3-year contract to build a new
warehouse facility. Information for Years 1, 2, and 3 is shown below:
Year 1
Year 2
Year 3
Sale price
$2,800,000 $2,800,000 $2,800,000
Estimated costs
1,600,000 2,000,000
2,000,000
Costs incurred to date (paid in cash)
400,000
900,000
2,000,000
Billed to date
250,000
1,150,000
2,800,000
Received in cash to date
190,000
950,000
2,800,000
Record the necessary journal entries for Years 1-3.

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