Thrasher Construction Co. was contracted to construct a building for $1,045,000. The building is owned by the customer throughout the contract period. The contract provides for progress payments. Thrasher's accounting year ends 31 December. Work began under the contract on 1 July 20X5, and was completed on 30 September 20X7. Construction activities are summarized below by year: 20x5 Construction costs incurred during the year, $192,600; estimated costs to complete, $674,100; progress billings during the year, $163,500; and collections, $149,800. 20x6 Construction costs incurred during the year, $481,500; estimated costs to complete, $203,300; progress billing during the year, $409,100; and collections, $406,600. 20X7 Construction costs incurred during the year, $209,000. Because the contract was completed, the remaining balance was billed and later collected in full per the contract. Required: 1. Prepare Thrasher's journal entries to record these events. Assume that percentage of completion is measured by the ratio of costs incurred to date divided by total estimated construction costs. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) View transaction list Journal entry worksheet 1 2 3 4 5 Record the construction costs incurred. >
Thrasher Construction Co. was contracted to construct a building for $1,045,000. The building is owned by the customer throughout the contract period. The contract provides for progress payments. Thrasher's accounting year ends 31 December. Work began under the contract on 1 July 20X5, and was completed on 30 September 20X7. Construction activities are summarized below by year: 20x5 Construction costs incurred during the year, $192,600; estimated costs to complete, $674,100; progress billings during the year, $163,500; and collections, $149,800. 20x6 Construction costs incurred during the year, $481,500; estimated costs to complete, $203,300; progress billing during the year, $409,100; and collections, $406,600. 20X7 Construction costs incurred during the year, $209,000. Because the contract was completed, the remaining balance was billed and later collected in full per the contract. Required: 1. Prepare Thrasher's journal entries to record these events. Assume that percentage of completion is measured by the ratio of costs incurred to date divided by total estimated construction costs. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) View transaction list Journal entry worksheet 1 2 3 4 5 Record the construction costs incurred. >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Ab. 129.
Transcribed Image Text:Thrasher Construction Co. was contracted to construct a building for $1,045,000. The building is owned by the customer throughout
the contract period. The contract provides for progress payments. Thrasher's accounting year ends 31 December. Work began under
the contract on 1 July 20X5, and was completed on 30 September 20X7. Construction activities are summarized below by year:
$674,100; progress
20x6 Construction costs
20x5 Construction costs incurred during the year, $192,600; estimated costs to complete,
billings during the year, $163,500; and collections, $149,800.
incurred during the year, $481,500; estimated costs to complete,
$203,300; progress billing during the year, $409,100; and collections, $406,600.
20X7 Construction costs incurred during the year, $209,000. Because the contract was
completed, the remaining balance was billed and later collected in full per the
contract.
Required:
1. Prepare Thrasher's journal entries to record these events. Assume that percentage of completion is measured by the ratio of costs
incurred to date divided by total estimated construction costs. (If no entry is required for a transaction/event, select "No journal
entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole
dollar.)
View transaction list
Journal entry worksheet
<
1
2
3
Date
20X5
Note: Enter debits before credits.
Record the construction costs incurred.
4
5
Statement of Financial Position:
Current assets:
Accounts receivable
Contract asset
Income Statement:
Income on construction (net)
General Journal
Debit
2. Provide the balances that would be shown on the SCI and SFP for this contract for each year. (Do not round intermediate
calculations. Round your final answers to the nearest whole dollar.)
20X5
Credit
20X6
>
20X7
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education