Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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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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