Question

During 2017, Culver Company started a construction job with a contract price of $1,610,000. The job was completed in 2019. The following information is available.

2017
2018
2019
Costs incurred to date       $393,900       $760,380       $1,059,000
Estimated costs to complete       616,100       341,620       –0–
Billings to date       299,000       905,000       1,610,000
Collections to date       268,000       818,000       1,421,000

  
Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.

Gross profit recognized in 2017      
$
Gross profit recognized in 2018      
$
Gross profit recognized in 2019      
$

Prepare all necessary journal entries for 2018.

Titles and Explanation
Debit
Credit

(To record cost of of construction.)

(To record progress billings.)

(To record collections.)

(To recognize revenue.)

Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.

2017
2018
2019
Gross profit      
$
$
$

Answer 1

				2017		2018		2019
				DEBIT $	CREDIT $	DEBIT $	CREDIT $	DEBIT $	CREDIT $
a)	To record construction cost
	Construction in progress a/c			393900		366480		298620
	To Accounts payable a/c				393900		366480		298620
b)	To record progress billings
	Account receivables a/c			299000		606000		705000
	To partial billings a/c				299000		606000		705000
c)	To recognize collection
	Cash a/c			268000		550000		603000
	To account receivables a/c				268000		550000		550000
d)	To recognize revenue
	Construction expense a/c			393900		366480		298620
	Construction in progress a/c			234000		116520		200480
	To Construction Revenue a/c				627900		483000		499100