LUS fr uni nt for 1255000 and collected 920000 At December 3

LUS fr uni nt for $1,255,000, and collected $920,000. At December 31, 2017, the estimated additional costs to complete the project total $3,338,370. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select \"No entry\" for the account titles

Solution

Working:

Percentage completion = Costs incurred/Estimated total costs = $1960630/($1960630 + $3338370) = $1960630/$5299000 = 37%

Revenue recognized = Percentage completion x Contract price = 37% x $7164000 = $2650680

Profit recognized = Revenue recognized - Expenses = $2650680 - $1960630 = $690050

Account Titles and Explanation	Debit	Credit
Construction in process	1960630
Materials, Cash, Payables		1960630
(To record costs incurred)
Accounts receivable	1255000
Billings on construction in process		1255000
(To record billings)
Cash	920000
Accounts receivable		920000
(To record collections)
Construction in process	690050
Construction expenses	1960630
Revenue from long-term contracts		2650680
(To recognize revenue and profit)