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Clorad Corp. contracts with a customer to construct a building. It appropriately determines that it has one performance obligation which is satisfied over time. Using

Clorad Corp. contracts with a customer to construct a building. It appropriately determines that it has one performance obligation which is satisfied over time. Using the following information for Year 1:

Year 1 (of 4-year project):

Construction costs incurred during the year $174,000
Estimated costs to complete the contract 426,000
Partial billings to customers 100,000
Collections from customers 25,000
Total contract price 1,000,000

Required:

Prepare the journal entries to record Year 1s (a) construction costs, (b) partial billings, (c) cash collections, and (d) gross profit.

CHART OF ACCOUNTS
Clorad Corp.
General Ledger
ASSETS
111 Cash
121 Accounts Receivable
141 Inventory
152 Prepaid Insurance
155 Construction in Progress
156 Partial Billings
181 Equipment
198 Accumulated Depreciation
LIABILITIES
211 Accounts Payable
231 Salaries Payable
250 Unearned Revenue
261 Income Taxes Payable
EQUITY
311 Common Stock
331 Retained Earnings
REVENUE
411 Sales Revenue
420 Construction Revenue
EXPENSES
500 Construction Expenses
511 Insurance Expense
512 Utilities Expense
521 Salaries Expense
532 Bad Debt Expense
540 Interest Expense
541 Depreciation Expense
559 Miscellaneous Expenses
910 Income Tax Expense

Prepare the journal entries to record Year 1s (a) construction costs, (b) partial billings, (c) cash collections, and (d) gross profit.

General Journal Instructions

GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

9

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