Question
In 2014, Robben Contractors began construction on an office building. The building was expected to cost $45,700,000 in total, and was expected to be completed
In 2014, Robben Contractors began construction on an office building. The building was expected to cost $45,700,000 in total, and was expected to be completed in early 2016. The customer was to pay Robben $49,900,000 for the building. Robben was able to use percentage-of-completion accounting for the project, and at the end of 2014 had accumulated $12,796,000 in cost.
During 2015, there was a lumber shortage, a strike by construction workers, and various other incidents that dramatically raised costs in the construction industry. As a result, at the end of 2015, Robben estimated that the office building would cost an additional $5,900,000 more than originally estimated. To the end of 2015, Robben had spent $41,280,000 on constructing the office building.
Prepare the journal entry to record revenue, construction expenses, and construction in process. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started