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Crane Construction Inc., which has a calendar year end, has entered into a non-cancellable fixed price contract for $2.9 million beginning September 1, 2020, to

Crane Construction Inc., which has a calendar year end, has entered into a non-cancellable fixed price contract for $2.9 million beginning September 1, 2020, to build a road for a municipality. It has been estimated that the road construction will be complete by June 2022. The following data pertain to the construction period.

202020212022
Costs to date$848,000$1,871,250$2,428,000
Estimated costs to complete1,802,000623,7500
Progress billings to date (non-refundable)890,0002,378,0002,900,000
Cash collected to date748,0002,271,0002,900,000

Using the percentage-of-completion method, calculate the estimated gross profit that would be recognized during each year of the construction period.

CRANE CONSTRUCTION INC.
STATEMENT OF GROSS PROFIT
202020212022Total
Revenue$928,000$1,247,000$725,000$2,900,000
Costs($848,000)($1,023,250)($556,750)($2,428,000)
Gross profit$80,000$223,750$168,250$472,000

Using the percentage-of-completion method, prepare the journal entries for 2020 and 2021. (Use Materials, Cash, Payables for costs incurred to date.)

For the Year 2020:

1-

2-

(To record Cost of Construction)

1-

2-

To record progress billings

1-

2-

To record collections

1-

2-

To record revenues

1-

2-

To record construction expenses

Same procedures for 2021:


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