The Balance Sheet of CPM Construction Company as of 31 December 2013 is given in Table P4.3. Assume that this company is using the POC method of income recognition. Further, assume that 65% of the projects with total bid price of $850,000 have been completed in 2014.

(a) Journalize the following transactions. Identify each transaction as asset, liability, revenue, expense, and so forth (Table P4.4).

(b) Establish relevant accounts for posting. Divide them into categories as Assets, Liabilities, and Net Worth.

(c) Close accounts as of 31 December 2014.

(d) Develop the Income Statement for the year 2014.

(e) Develop the Balance Sheet as of 31 December 20X4.

Transcribed Image Text:

TABLE P4.3 Balance Sheet, CPM Construction Company (31 December, 2013) Assets Liabilities 75,000 Accounts payable 85,000 Cash 110,000 Notes payable 50,000 Accounts receivable 300,000 Long-term loans 60,000 Buildings Less accumulated depreciation (150,000) Total liabilities 195,000 on the buildings 240,000 Net worth Construction equipment Less accumulated (80,000) Capital stocks 250,000 depreciation on equipment 20,000 Retained earnings 70,000 Other assets 515,000 Total net worth 320,000 Total assets Total net worth and liabilities 515,000