Question
In February 2020, Sandhill Construction signed a contract and commenced construction on a parking garage. The total contract price was $90.4 million and was expected
In February 2020, Sandhill Construction signed a contract and commenced construction on a parking garage. The total contract price was $90.4 million and was expected to be completed in July 2022 at a total estimated cost of $82.4 million. Payment by the customer was to be made in several stages, based on significant events and dates throughout the construction timeline. Based on the terms of the contract with the customer, control over the parking garage (i.e. ownership) does not transfer to the customer until completion. Sandhills year-end was September 30 and follows ASPE. By the end of September, 2020, Sandhill had incurred $8,240,000 in costs and had invoiced $10,200,000 in progress billings. $8,300,000 of the progress billings had been collected. By September 30, 2021, Sandhill had incurred $43,175,000 in total costs and had invoiced $45,500,000 in progress billings, including the progress billings in 2020. Of the total billings, $30,500,000 in total had been collected. Also, Sandhill reviewed its cost estimates on the project, and now believed the parking garage would cost $78.5
1. Using the completed-contract method, prepare all journal entries required for the year ended September 30, 2020. Use Materials, Cash, Payables for costs incurred to date.
2.Using the completed-contract method, prepare all journal entries required for the year ended September 30, 2021. Use Materials, Cash, Payables for costs incurred to date.
3. Prepare the journal entry to record revenue and cost of construction on completion of the project, assuming all billings are completed and the total actual cost is the same as the 2021 estimate. Use Materials, Cash, Payables for costs incurred to date.
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