Question

Turner, Inc. began work on a $7,000,000 contract in 2021 to construct an office building. During 2021, Turner, Inc. incurred costs of $1,700,000, billed its customers for $1,200,000, and collected $960,000. At December 31, 2021, the estimated future costs to complete the project total $3,300,000. Make Turner’s 2021 journal entries using the percentage-of-completion method.

 

Answer 1

Account Title	Debit	Credit
Construction in Process	1,700,000
Materials, Cash, Payables		1,700,000
Accounts Receivable	1,200,000
Billings on Construction in Process		1,200,000
Cash	960,000
Accounts Receivable		960,000
Construction in Process [($1,700,000 ÷ 5,000,000) X $2,000,000]	680,000
Construction Expenses	1,700,000
Revenue from Long-Term Contracts ($7,000,000,000 X 34%)		2,380,000

 

Account Title	Debit	Credit
Construction in Process	1,700,000
Materials, Cash, Payables		1,700,000
Accounts Receivable	1,200,000
Billings on Construction in Process		1,200,000
Cash	960,000
Accounts Receivable		960,000
Construction in Process [($1,700,000 ÷ 5,000,000) X $2,000,000]	680,000
Construction Expenses	1,700,000
Revenue from Long-Term Contracts ($7,000,000,000 X 34%)		2,380,000