INTER. ACCOUNTING - CONNECT+ALEKS ACCESS
10th Edition
ISBN: 9781264770335
Author: SPICELAND
Publisher: MCG
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Required:
1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.
2. Prepare journal entries for 2018 and 2019 to record the transactions described (credit "various accounts" for
construction costs incurred).
3. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018 and 2019.
Prepare journal entries for 2024 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred).
In 2025, Sunland Construction Corp. began construction work under a 3-year contract. The contract price was $1,090,000. Sunland
uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the
proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this
contract at December 31, 2025, are shown below.
Balance Sheet
Accounts receivable
Construction in process
Less: Billings
Costs and recognized profit in excess of billings
Income Statement
$16,600
$62,500
58,000
4,500
Income (before tax) on the contract recognized in 2025
(a)
Your answer is correct.
How much cash was collected in 2025 on this contract?
(b)
Portion of contract billings collected $
eTextbook and Media
* Your answer is incorrect.
$20,000
41400
What was the initial estimated total income before tax on this contract?
Income before tax on this contract
$
4500
Attempts: 2 of 15 used
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