Prepare the journal entries required in 2021, if any, to record construction costs, revenues, and billings.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Seasons Construction is constructing an office building under contract for Cannon
Company and uses the percentage-of-completion method. The contract calls for
progress billings and payments of $5,000,000 each year. The total contract price is
$15,000,000 and Seasons estimates total costs of $12,000,00O. Seasons estimates
that the building will take 3 years to complete, and commences construction on
January 2, 2021.
At December 31, 2021, Seasons estimates that it is 30% complete with the
construction, based on costs incurred, which are consistent with the original
estimate.
Prepare the journal entries required in 2021, if any, to record construction costs,
revenues, and billings.
Transcribed Image Text:Seasons Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $5,000,000 each year. The total contract price is $15,000,000 and Seasons estimates total costs of $12,000,00O. Seasons estimates that the building will take 3 years to complete, and commences construction on January 2, 2021. At December 31, 2021, Seasons estimates that it is 30% complete with the construction, based on costs incurred, which are consistent with the original estimate. Prepare the journal entries required in 2021, if any, to record construction costs, revenues, and billings.
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