None Kailey Construction accepted a three-year, $1,000,000 fixed fee contract to renovate a parkingdeck. Kailey uses the percentage of completion method and the cost-to-cost method of measuringprogress. Information related to the construction contract follows:202220232024Actual construction costs incurred duringthe year$ 350,000$525,000$ 50,000Construction costs incurred in prior years0350,000875,000Cumulative construction costs incurred todate350,000875,000925,000Estimated costs to complete450,00025,0000Estimated total costs800,000900,000925,000Progress billings made during the year500,000300,000200,000Cash collections during the year400,000350,000250,000Required:a. Calculate the percentage of completion, revenues and gross profits recognized for each year.b. Prepare the journal entries required for each year to record the contract. Show all supportingcomputations.c. Prepare partial balance sheet for 2022 and 2023.

Partial Balance Sheets:For 2022:Construction in Process: $350,000Billings on Construction in…

Answered: Kailey Construction accepted a…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 18RE

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