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.)
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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:
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.
Date
20X5
Note: Enter debits before credits.
General Journal
Debit
Credit
>
Transcribed Image Text: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.)
Statement of Financial Position:
Current assets:
Accounts receivable
Contract asset
Income Statement:
Income on construction (net)
20X5
20X6
20X7
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