Question

Cullumber Construction Company began work on a $400,000 construction contract in 2020. During 2020, Cullumber incurred costs of $250,000, billed its customer for $200,000, and collected $170,000. At December 31, 2020, the estimated additional costs to complete the project total $178,890.

Prepare Cullumber’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

Required journal entries are as follows:

Note: No profit or loss will be recorded before the completion of the contract under the completed-contract method. Here, the date of the recording journal is not given so, if the profit or loss is recorded before December 31, 2020. Then there will be no journal entry for part (b).

Working Note:

Results of the excel sheet are as follows: