FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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In 2020, Crane Contractors began construction on an office building. The building was expected to cost $46,310,000 in total, and
was expected to be completed in early 2022. The customer was to pay Crane $48,760,000 for the building. Crane was able to use
percentage-of-completion accounting for the project, and at the end of 2020 had accumulated $11,577,500 in cost. Crane
estimated that the costs to complete the construction were in line with the original expected total costs.
During 2021, there was a lumber shortage, a strike by construction workers, and various other incidents that dramatically raised
costs in the construction industry. As a result, at the end of 2021, Crane estimated that the office building would cost $4,780,000
in total. To the end of 2021, Crane had spent $38,828,400 on constructing the office building.
Calculate the revenue to be recognized by Crane for the 2021 fiscal year.
Revenue to be recognized
$
$24,867,600
Prepare the journal entry to record revenue, construction expenses. (Credit account titles are automatically indented
when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account
titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
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Transcribed Image Text:In 2020, Crane Contractors began construction on an office building. The building was expected to cost $46,310,000 in total, and was expected to be completed in early 2022. The customer was to pay Crane $48,760,000 for the building. Crane was able to use percentage-of-completion accounting for the project, and at the end of 2020 had accumulated $11,577,500 in cost. Crane estimated that the costs to complete the construction were in line with the original expected total costs. During 2021, there was a lumber shortage, a strike by construction workers, and various other incidents that dramatically raised costs in the construction industry. As a result, at the end of 2021, Crane estimated that the office building would cost $4,780,000 in total. To the end of 2021, Crane had spent $38,828,400 on constructing the office building. Calculate the revenue to be recognized by Crane for the 2021 fiscal year. Revenue to be recognized $ $24,867,600 Prepare the journal entry to record revenue, construction expenses. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit
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