In: Accounting
In February 2020, Sandhill Construction signed a contract and
commenced construction on a parking garage. The total contract
price was $90.8 million and was expected to be completed in July
2024 at a total estimated cost of $83.0 million. Payment by the
customer was to be made in several stages, based on significant
events and dates throughout the construction timeline. The customer
was to have control over the parking garage and was able to make
major changes to the project during the construction process.
Sandhill’s year-end was September 30.
By the end of September, 2020, Sandhill had incurred $20,750,000 in
costs and had invoiced $10,400,000 in progress billings. $7,600,000
of the progress billings had been collected.
By September 30, 2021, Sandhill had incurred $40,200,000 in total
costs and had invoiced $45,500,000 in progress billings, including
the progress billings in 2020. Of the total billings, $30,500,000
in total had been collected. Also, Sandhill reviewed its cost
estimates on the project, and now believed the parking garage would
cost $80.4 million in total to complete.
Prepare all journal entries required for the year ended September 30, 2020. Use Materials, Cash, Payables for costs incurred to date.
Prepare all journal entries required for the year ended September 30, 2021. Use Materials, Cash, Payables for costs incurred to date.