Wermer, Inc. began a construction project in 2020. The project is accounted for under the percentage of completion method. The total price of the job is $50 million. The following information (in million dollars) applies: 2020 2021 Construction costs incurred during the year Construction costs incurred in prior years Cumulative construction costs $20 -0- 20 $10 20 30 Estimated costs to complete at end of year Total estimated and actual construction costs 10 $40 15 $35 i) Calculate Wermer's percentage-of completion for 2020, and write the journal entry that records 2020 revenue for this project. ii) Calculate Wermer's percentage-of completion for 2021, and write the journal entry that records 2021 revenue for this project.
Wermer, Inc. began a construction project in 2020. The project is accounted for under the percentage of completion method. The total price of the job is $50 million. The following information (in million dollars) applies: 2020 2021 Construction costs incurred during the year Construction costs incurred in prior years Cumulative construction costs $20 -0- 20 $10 20 30 Estimated costs to complete at end of year Total estimated and actual construction costs 10 $40 15 $35 i) Calculate Wermer's percentage-of completion for 2020, and write the journal entry that records 2020 revenue for this project. ii) Calculate Wermer's percentage-of completion for 2021, and write the journal entry that records 2021 revenue for this project.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Wermer, Inc. began a construction project in 2020. The project is accounted for under the percentage
of completion method. The total price of the job is $50 million. The following information (in million
dollars) applies:
2020
2021
Construction costs incurred during the year
Construction costs incurred in prior years
$20
-0-
20
$10
20
30
Cumulative construction costs
Estimated costs to complete at end of year
Total estimated and actual construction costs
15
10
$35
$40
i) Calculate Wermer's percentage-of completion for 2020, and write the journal entry that records
2020 revenue for this project.
ii) Calculate Wermer's percentage-of completion for 2021, and write the journal entry that records
2021 revenue for this project.
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