Assignment 2: Case Data

American Construction Company, Inc. started operations on January 2, 2010. American was awarded the contract for Project 101 during January. Bid price was $200,000. Estimated project cost was $180,000. Review the demonstration problem within the text for a complete explanation for entering Januarys transactions into the general journal, posting to account ledgers, closing out and finding ending balances for accounts as appropriate, and preparing Januarys income statement, and balance sheet.

During February, the second month of operations, American completed Project 101 and began Project 102. The contract amount for Project 102 was $500,000. Estimated project cost was $400,000. The following transactions occurred during February:

1. Payroll disbursements: Project 101 - $20,000 of which $5,000 was for January labor used but not paid for; Project 102 - $15,000; Office wage - $1,500 of which $500 was for January wage used but not paid for; Salaries - $3,000.

2. Labor cost incurred in February but not paid for: Project 102 - $5,000; Office Wage - $500.

3. Material costing $9,000 were purchased on account for Project 101 and $28,000 for Project 102

4. Subcontractor billings: Project 101 - $45,000; Project 102 - $50,000. (10% retention)

5. Equipment cost: Project 101 - $800; Project 102 - $1500. (cash disbursed)

6. Job Overhead cost: Project 101 - $200; Project 102 - $500. (cash disbursed)

7. Progress billing sent to clients: Project 101 - $80,000; Project 102 - $100,000. (10% retention)

8. Received check in the amount of $108,000 from Project 101.

9. Paid material vendor invoice for $23,500 and subcontractor progress billing for $36,000.

10. Made interest payment for February on short-term loan. See January payment.

11. Made principle and interest payment for February on pick-up truck loan. See January.

12. Supplies taken from inventory - $100.

13. Insurance expired for February. See January.

14. Miscellaneous cash disbursements: Rent - $100; Utilities - $50; Advertising - $25.

Requirements

Enter financial transactions into a general journal by referring to the demonstration problem on Page 2-25 and 2-26.