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Wildhorse Construction Inc., which has a calendar year end, has entered into a non-cancellable fixed-price contract for $2.6 million beginning September 1, 2023, to build a road for a municipality. It has been estimated that the road construction will be complete by June 2025. The following data pertain to the construction period.

Wildhorse Construction Inc., which has a calendar year end, has entered into a non-cancellable fixed-price contract for $2.6 million beginning September 1, 2023, to build a road for a municipality. It has been estimated that the road construction will be complete by June 2025. The following data pertain to the construction period.

FINANCIAL ACCOUNTING
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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Wildhorse Construction Inc., which has a calendar year end, has entered into a non-cancellable fixed-price contract for $2.6 million beginning September 1, 2023, to build a road for a municipality. It has been estimated that the road construction will be complete by June 2025. The following data pertain to the construction period. Costs to date Estimated costs to complete Progress billings to date (non-refundable) Cash collected to date. 2023 $736.000 1,564,000 796.000 636,000 2024 $1,634,000 516,000 2.132.000 2,007,000 2025 $2,182,000 0 2.600,000 2,600,000
Transcribed Image Text:Wildhorse Construction Inc., which has a calendar year end, has entered into a non-cancellable fixed-price contract for $2.6 million beginning September 1, 2023, to build a road for a municipality. It has been estimated that the road construction will be complete by June 2025. The following data pertain to the construction period. Costs to date Estimated costs to complete Progress billings to date (non-refundable) Cash collected to date. 2023 $736.000 1,564,000 796.000 636,000 2024 $1,634,000 516,000 2.132.000 2,007,000 2025 $2,182,000 0 2.600,000 2,600,000
Using the percentage-of-completion method, prepare the journal entries for 2024. (Use Materials, Cash, Payables for costs incurred to date.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter 0 for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Contract Asset/Liability Materials, Cash, Payables (To record cost of construction) Accounts Receivable Contract Asset/Liability (To record progress billings) Cash Accounts Receivable (To record collections) Contract Asset/Liability Revenue from Long-Term Contracts (To record revenues) Construction Expenses Contract Asset/Liability (To record construction expenses) Debit 1634000 2132000 2007000 1348000 1634000 Credit 00 00 1634000 2132000 2007000 1348000 1634000
Transcribed Image Text:Using the percentage-of-completion method, prepare the journal entries for 2024. (Use Materials, Cash, Payables for costs incurred to date.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter 0 for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Contract Asset/Liability Materials, Cash, Payables (To record cost of construction) Accounts Receivable Contract Asset/Liability (To record progress billings) Cash Accounts Receivable (To record collections) Contract Asset/Liability Revenue from Long-Term Contracts (To record revenues) Construction Expenses Contract Asset/Liability (To record construction expenses) Debit 1634000 2132000 2007000 1348000 1634000 Credit 00 00 1634000 2132000 2007000 1348000 1634000
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