1. Frigid Temperatures Inc. has sold 1,000 refrigerators during 2020 at a total price of $ 1,620,000, with a warranty guarantee that the product was free from any defects. The cost of the refrigerators sold was $1,080,000. The warranty covers one year, with an estimated cost of $ 10,000. In addition, Frigid Temperatures Inc. sold extended warranties on 600 refrigerators for four years beyond the one-year period for $ 210,000.

Required

Prepare the journal entries to record the sale and related warranties for 2020.

Project	Total contract Price	Billings through 12/31/20	Cash collections through 12/31/20
A	$ 615,000	$ 340,000	$ 310,000
B	450,000	135,000	135,000
C	475,000	475,000	390,000
D	600,000	240,000	160,000
E	480,000	400,000	400,000
	$ 2,620,000	$ 1,590,000	$ 1,395,000

Project	Contract costs incurred through 12/31/20	Estimated additional costs to complete contracts
A	$ 510,000	$ 120,000
B	130,000	260,000
C	350,000	-0-
D	370,000	290,000
E	320,000	80,000
	$ 1,680,000	$ 750,000

• Each contract is with a different customer.
• Any work remaining to be done on the contracts is expected to be completed in 2021.

Required

Prepare a schedule by project, calculating the amount of gross profit (or loss) for the 2020 calendar year, which would be reported under:

1. The completed-contract method.
2. The percentage-of-completion method (based on estimated costs).

Prepare the general journal entry to record revenue and gross profit on project B for 2020, assuming that the percentage-of-completion method is used.

Indicate the balances that would appear in the statement of financial position at December 31, 2020 for the following accounts for Project D, assuming that the percentage-of-completion method is used.

3. Accounts Receivable
4. Billings on Construction in Process
5. Construction in Process

How would the balances in the accounts discussed in part 3 above change (if at all) for Project D, if the completed-contract method is used?