Explanation Transaction Price: Transaction price refers to the price that a corporation receives or expects to receive in the future for the goods and services provided. Percentage of Completion Method: Percentage of completion method recognizes revenue for the completed part of the project. This method is used when the contract spans for multiple accounting period like construction projects. Journal entry for the 2015: Entry for actual cost incurred Date Account Title and Explanation Post. ref. Debit ($) Credit ($) Construction in progress 350,000 Cash 350,000 (to record cost of construction) Table (1) Construction in progress account is the asset account because completion of the work increases the assets of the company that is why it is debited. Cash account is the assets account. Since, the cash has been paid to the suppler and worker due to which cash of the company is decreasing that is why cash accounts will credit. Journal entry for billing Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) Account receivables 500,000 Billing in receivable 500,000 (to record billing) Table (2) Accounts receivable is the assets account. Since, during the construction account receivable is received which increase the assets of the company that is why it is debited Billing in receivable is decreasing due to which assets of the company are decreasing that is why it will be credited. Journal entry of cash collection Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) Cash 400,000 Account receivables 400,000 (to record cash received) Table (3) Cash account is the asset account as the cash has been received due to which assets of the company increased that is why cash account is debited. Account receivable is the assets account and the account receivable is decreasing that is why it is credited. Journal entry for the revenue and gross profit Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) Construction costs 87,500 Construction in progress 350,000 Revenue for long term project 437,500 (to record cost and revenue) Table (4) Construction cost account is the expense account. Since, the expense of the company is increased that is why the construction cost account is debited. Construction in progress account is the asset account because completion of the work increases the assets of the company that is why it is debited. Revenue for long term project is the real account. Since, the revenue of the company increased that is why it will be credited. Journal entry for 2016: Entry for actual cost incurred Date Account Title and Explanation Post. ref. Debit ($) Credit ($) Construction in progress 525,000 Cash 525,000 (to record cost of construction) Table (5) Construction in progress account is the asset account because completion of the work increases the assets of the company that is why it is debited. Cash account is the assets account. Since, the cash has been paid to the suppler and worker due to which cash of the company is decreasing that is why cash accounts will credit. Journal entry for billing Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) Account receivables 300,000 Billing in receivable 300,000 (to record billing) Table (6) Accounts receivable is the assets account. Since, during the construction account receivable is received which increase the assets of the company that is why it is debited Billing in receivable is decreasing due to which assets of the company are decreasing that is why it will be credited. Journal entry of cash collection Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) Cash 350,000 Account receivables 350,000 (to record cash received) Table (7) Cash account is the asset account as the cash has been received due to which assets of the company increased that is why cash account is debited. Accounts receivable is the assets account and the account receivable is decreasing that is why it is credited. Journal entry for the revenue and gross profit Date Account Title and Explanation Post. Ref. Debit ($) Credit ($) Construction cost 525,000 Construction in progress 9,700 Revenue for long term project 534,700 (to record cost and revenue) Table (8) Construction cost account is the expense account. Since, the expense of the company is increased that is why the construction cost account is debited. Construction in progress account is the asset account because completion of the work increases the assets of the company that is why it is debited. Revenue for long term project is the real account. Since, the revenue of the company increased that is why it will be credited. Journal entry for 2017: Entry for actual cost incurred Date Account Title and Explanation Post. ref. Debit ($) Credit ($) Construction in progress 50,000 Cash 50,000 (to record cost of construction) Table (9) Construction in progress account is the asset account because completion of the work increases the assets of the company that is why it is debited. Cash account is the assets account. Since, the cash has been paid to the suppler and worker due to which cash of the company is decreasing that is why cash accounts will credit. Journal entry for billing Date Account Title and Explanation Post...