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    Chapter 6: Revenue Recognition: Intermediate Accounting

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    Shyam S
    ABC Construction Company was contracted to build a building for $975,000 over a two year period from July 2015 to September 2017. Under the percentage of completion method, ABC would record construction costs and billings/collections each year. In 2015, ABC incurred $180,000 in costs, estimated remaining costs of $630,000, billed $153,000 and collected $140,000. In 2016, costs were $450,000 with estimated remaining costs of $190,000, billings were $382,500 and collections were $380,000. In 2017, final costs were $195,000 and the remaining balance was billed and collected per the contract.

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    Chapter 6: Revenue Recognition: Intermediate Accounting

    Uploaded by

    Shyam S
    104 views6 pages
    ABC Construction Company was contracted to build a building for $975,000 over a two year period from July 2015 to September 2017. Under the percentage of completion method, ABC would record construction costs and billings/collections each year. In 2015, ABC incurred $180,000 in costs, estimated remaining costs of $630,000, billed $153,000 and collected $140,000. In 2016, costs were $450,000 with estimated remaining costs of $190,000, billings were $382,500 and collections were $380,000. In 2017, final costs were $195,000 and the remaining balance was billed and collected per the contract.

    Original Description:

    Chapter 6: Revenue Recognition

    Original Title

    IA-Chapter-6-QA

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    ABC Construction Company was contracted to build a building for $975,000 over a two year period from July 2015 to September 2017. Under the percentage of completion method, ABC would record construction costs and billings/collections each year. In 2015, ABC incurred $180,000 in costs, estimated remaining costs of $630,000, billed $153,000 and collected $140,000. In 2016, costs were $450,000 with estimated remaining costs of $190,000, billings were $382,500 and collections were $380,000. In 2017, final costs were $195,000 and the remaining balance was billed and collected per the contract.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    104 views6 pages

    Chapter 6: Revenue Recognition: Intermediate Accounting

    Uploaded by

    Shyam S
    ABC Construction Company was contracted to build a building for $975,000 over a two year period from July 2015 to September 2017. Under the percentage of completion method, ABC would record construction costs and billings/collections each year. In 2015, ABC incurred $180,000 in costs, estimated remaining costs of $630,000, billed $153,000 and collected $140,000. In 2016, costs were $450,000 with estimated remaining costs of $190,000, billings were $382,500 and collections were $380,000. In 2017, final costs were $195,000 and the remaining balance was billed and collected per the contract.

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    Intermediate Accounting 1

    Chapter 6: Revenue Recognition

    Question Sheet

    1. ABC Construction Company was contracted to construct a building for $975,000. The building is
    owned by a customer throughout the contract period. The contract provides for progress
    st
    31
    payments. ABC’s accounting year end is December Work began under the contract on July
    st
    1 th
    30
    2015 and was completed in September 2017. Information regarding construction
    activities is provided below

    2015: Construction costs incurred during the year; $180,000, estimated costs to complete,
    $630,000, progress billings during the year, $153,000, and collections of $140,000

    2016: Construction costs incurred during the year; $450,000, estimated costs to complete,
    $190,000, progress in billings during the year, $382,500 and collections of $380,000

    2017: Construction costs incurred during the year; $195,000, because the contract was
    completed, the remaining balance was billed later and collecting in full per the contract

    Required:

    Provide journal entries that will be recorded by ABC Construction. Assume percentage of
    completion method has been used.

    Prepared by: Charanjit Sirigh


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