There should be 9 journal entry for required 1 and 8 journal

MSK Construction Company contracted to construct a factory building for $525.000. Construction started during 2019 and was completed in 2020. Information relating to the con- tract follows: P3-3 Revenue recognitic time and at a point under ASC Topic 60 (LO 3-4) 2019 2020 Costs incurred during the year Estimated additional cost to complete Billings during the year Cash collections during the year $290,000 $150.000 145,000 260,000 265.000 240,000 285,000 Required: 1. Record the preceding transactions in MSK\'s books assuming it recognizes revenue over time and uses costs incurred to measure the extent to which its performance obligation has been satisfied. 2. Record the preceding transactions in MSK\'s books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project

Solution

Answer a. Percentage of Completion Method 2019 2020 Cost Incurred each year (A)              290,000              150,000 Cost Incurred to date (B)              290,000              440,000 Estimated Costs ©              145,000                         -   Total Estimated Costs (D = B + C)              435,000              440,000 % Completed (E = B / D) 66.67% 100.00% Revenue              350,000              175,000 Expenses              290,000              150,000 Gross Profit                60,000                25,000 Answer a. - Percentage of Completion Journal Entry Date Particulars Dr. Amt Cr. Amt. 2019 1 Construction In Progress                Dr.              290,000    To Cash              290,000 2 Accounts Receivable                        Dr.              260,000    To Billings on Contract              260,000 3 Cash                                                         Dr.              240,000    To Accounts Receivable              240,000 4 Construction In Progress                Dr.                60,000 Construction Expense                     Dr.              290,000     To Construction Revenue              350,000 2020 1 Construction In Progress                Dr.              150,000    To Cash              150,000 2 Accounts Receivable                        Dr.              265,000    To Billings on Contract              265,000 3 Cash                                                         Dr.              285,000    To Accounts Receivable              285,000 4 Construction In Progress                Dr.                25,000 Construction Expense                     Dr.              150,000     To Construction Revenue              175,000 5 Billings on Contract                          Dr.              525,000     To Construction in Progress              525,000 Answer b. Completed Contract Method Year 1 Year 2 Revenue                         -          525,000.00 Expenses                         -          440,000.00 Gross Profit                         -            85,000.00 Answer a. - Completed Contract Method Journal Entry Date Particulars Dr. Amt Cr. Amt. 2019 1 Construction In Progress                Dr.              290,000    To Cash              290,000 2 Accounts Receivable                        Dr.              260,000    To Billings on Contract              260,000 3 Cash                                                         Dr.              240,000    To Accounts Receivable              240,000 2020 1 Construction In Progress                Dr.              150,000    To Cash              150,000 2 Accounts Receivable                        Dr.              265,000    To Billings on Contract              265,000 3 Cash                                                         Dr.              285,000    To Accounts Receivable              285,000 4 Construction In Progress                Dr.                85,000 Construction Expense                     Dr.              440,000     To Construction Revenue              525,000 5 Billings on Contract                          Dr.              525,000     To Construction in Progress              525,000