ABC Construction Co. signed a $2,000,000 contract to construct an office building for the State of...

ABC Construction Co. signed a $2,000,000 contract to construct an office building for the State of Arizona. The project will begin in 2017 and be completed in 2018. The cost of construction is expected to be $1,875,000.

Below is a summary of events for 2017 and 2018:

	2017	2018
Costs incurred during the year	$ 712,500	$1,138,250
Estimated costs to complete	1,037,500	0
Billings during the year	850,000	1,150,000
Cash collections during the year	750,000	1,000,000

ABC Construction Co. recognizes revenue upon completion when accounting for long-term contracts.

a. Prepare all journal entries to record costs, billings, collections, and any profit recognition for ABC Construction Co. activities for 2017 only.

b. Prepare any journal entry needed for profit recognition only for ABC Construction Co. activities for 2018.

Expert Solution

ekkarill92 answered 1 year ago

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