Question
In: Accounting
On February 1, 2020, a company agreed to construct a building at a contract price of...
On February 1, 2020, a company agreed to construct a building at a contract price of $35,000. The company estimated the project would be finished in 2022. Information relating to the costs and billings for this contract is as follows:
2020 2021 2022
Total costs incurred to date $8,000 $10,000 $22,000
Estimated costs to complete 12,000 6,000 -0-
Customer billings to date 8,000 24,000 29,000
Collections to date 4,000 14,000 25,000
The journal entry to record Billings on Construction in Process in 2021 has the amount of _________.
Solutions
Expert Solution
I'm really sorry, I misread the question and I'm editing the answer to make it easy for you, rather than solving in the comments.
The amount to be booked as Billings on construction in process shall be calculated in the following manner
Total Revenue of Contract is - 35,000$
As on 2021, Total Work Completed is 10,000 and estimated expense to completion is 6,000$ which means 62.5% of the work is done and accordingly 62.5% of the revenue should also be recorded.
So therefore, 62.5% of 35,000$ is $21,875.
Billings done earlier is 8,000$, therefore balance of 13,875$ should be the billings to be recorded in the current year i.e. 2021.
The answer is $ 13,875.
I am really sorry once again and hope this answer satisfies your purpose.
I hope the above solution is what you were looking for. For any further queries or doubts in the solution, please feel free to drop a comment. Please do leave a positive feedback, Thank you :
ekkarill92 answered 10 months agoRelated Solutions
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