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How to arrive at answer? Use the following information to answer questions 6-10. Tunnels R Us commenced the construction of a tunnel for the city
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Use the following information to answer questions 6-10. Tunnels R Us commenced the construction of a tunnel for the city of Sydney on 1 July 20X5. It was a fixed price contract with revenue of $85 million. The expected completion date is 30 June 20X8. It is expected to cost $74 million to construct. The following information relates to the tunnel construction: For the year ending 30 June 20X6 20X7 20X8 $'000 $'000 $'000 Costs incurred to date 23,680 47,500 87,000 Estimated cost to complete 50,320 28,500 Progress billings during the year 20,000 50,000 15,000 Cash collected during the year 15,000 52,000 18,000 Physical completion % 25 59 100 Tunnels R Us uses the percentage of completion method based on cost to account for its construction contracts. Assume all estimates are reliable. Note that all figures are in $000. 8. What is the appropriate journal entry to record the contract revenue and contract expenses for the year ended 30 June 20X8? a) Dr Construction Expenses $25,923 Cr Construction Revenue $23,820 Cr Construction In Progress $23,820 b) Dr Construction Expenses $87,000 Cr Construction Revenue $85,000 Cr Construction In Progress $2,000 e) Dr Construetion Expenses $39,500 Cr Construction Revenue $39,500 d) Dr Construction Expenses $39,500 Cr Construction Revenue $31,875 Cr Construction In Progress $7,625 e) Dr Construction Expenses $39,500 Cr Construction Revenue $31,875 Cr Construction In Progress $7,625Step by Step Solution
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