Question

Windsor Construction Company began work on a $404,000 construction contract in 2020. During 2020, Windsor incurred costs of $273,000, billed its customer for $232,000, and collected $182,000. At December 31, 2020, the estimated additional costs to complete the project total $163,660.

Prepare Windsor’s journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method. (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. Round answers to 0 decimal places, e.g. 5,275.)

No.	Account Titles and Explanation	Debit	Credit
(a)	enter an account title to record the transaction using the percentage-of-completion method	enter a debit amount	enter a credit amount
	enter an account title to record the transaction using the percentage-of-completion method	enter a debit amount	enter a credit amount
	enter an account title to record the transaction using the percentage-of-completion method	enter a debit amount	enter a credit amount
(b)	enter an account title to record the transaction using the completed-contract method	enter a debit amount	enter a credit amount
	enter an account title to record the transaction using the completed-contract method	enter a debit amount	enter a credit amount

Answer 1

Solution:

No.	Account Title and Explanation	Debit	Credit
a)	Construction Expense	$             285,241
	Construction in process		$             32,660
	Construction Revenue		$           252,581
	( To record loss on account)
b)	Loss from contract	$               32,660
	Construction in process		$             32,660
	( To record loss on account)

Working:

1	Incurred Cost	$             273,000
2	Estimated Additional Cost	$             163,660
3	Total Cost	$             436,660
4	% of Completion [273000/436660]	62.52 %
5	Contract Price	$             404,000
6	Construction Revenue for completed work[404000*62.52%]	$             252,581
7	Estimated Loss[436660-404000]	$             (32,660)