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Bailey Builders Corporation accepted a three-year, $1,000,000 fixed-fee contract to renovate a parking deck. Bailey uses the percentage-of-completion method and the cost-to-cost method of measuring
Bailey Builders Corporation accepted a three-year, $1,000,000 fixed-fee contract to renovate a parking deck. Bailey uses the percentage-of-completion method and the cost-to-cost method of measuring progress. Information related to the construction contract is presented below.
Description
Reading order description of t-table
Contract price | $1,000,000 | ||
---|---|---|---|
2015 | 2016 | 2017 | |
Actual construction costs incurred during the year | $350,000 | $525,000 | $ 50,000 |
Construction costs incurred in prior years | 0 | 350,000 | 875,000 |
Cumulative construction costs incurred to date | $350,000 | $875,000 | $925,000 |
Estimated costs to complete | 450,000 | 25,000 | 0 |
Estimated total costs | $800,000 | $900,000 | $925,000 |
Progress billings made during the year | $500,000 | $300,000 | $200,000 |
Cash collections during the year | 400,000 | $350,000 | $250,000 |
Prepare the journal entries required in each year to record the contract. Show all supporting computations.
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