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2. How do I calculate the amount of revenue to credit for Revenue from Long-Term Contracts and the amount of Construction in Process to credit?

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2. How do I calculate the amount of revenue to credit for "Revenue from Long-Term Contracts" and the amount of "Construction in Process" to credit? Answer: This topic is in the appendix of chapter 18. To calculate the revenue to recognize you use the following formula: (estimated total revenue) * (costs incurred/(costs incurred + estimated additional costs) = revenue to be recognized revenue to be recognized - total revenue recognized in prior periods = current period revenue (in our case there is no prior period revenue recognized) To calculate the construction in process you use the following formula: (estimated total revenue) - (costs incurred + estimated additional costs) = construction in process Because the expected total costs exceed the estimated total revenue, a loss needs to be included in the construction expenses. (costs incurred + the construction in process (above)) = construction expenses Tamarisk Construction Company began work on a $414,500 construction contract in 2020. During 2020, Tamarisk incurred costs of $289,500, billed its customer for $210,500, and collected $175,000. At December 31, 2020, the estimated additional costs to complete the project total $155,200 Prepare Tamarisk's journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed contract method (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter for the amounts. Round answers to decimal places, eg. 5,275.) No. Account Titles and Explanation Debit Credit (a) Construction Expenses 289500 Construction in Process 30200 Revenue from Long-Term Contracts 259300 (b) Loss from Long-Term Contracts Construction in Process 30200

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