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DUESTION 3: Percentage of Completion Method Lilia Construction Company has contracted to build an office building. The construction began on January 1, 2020, and the estimated time of completion is July 1, 2023. The building cost is estimated to be $40,000,000 and will be billed at $48,000,000. The following data relate to the construction period 2020 2021 2022 2923 Costs to date $11,000,000 $20,000,000 $27,000,000 $40,000,000 Estimated costs to complete $29,000,000 $20,000,000 $13,000,000 so- Progress billings to date $6.000.000 $18,000,000 $28,000,000 $48.000.000 Cash Collected to date $6,000,000 $15,000,000 $25,000,000 $48,000,000 STEP 1 Contract Price Less Estimated Cost: Costs to Date Estimated Costs to Complete Estimated Total Costs Estimated Total Gross Profit % of Completion To record cost of construction: Dr. Cr. To record progress billings: Dr. Cr. To record collections: Dr. Cr. STEP 2 Allocation of Revenue and gross profit to each period Revenue Recognized in: Cumulative Revenue to be recognized to date Less: Revenue recognized to date Revenue recognized in the current period Gross Profit recognized in: Cumulative GP to be recognized to date : Less: GP recognized to date GP recognized in the current period STEP 3 Journal Entries STEPS Journal Entries Prepare journal entry to Recognize Revenue and Gross Profit in 2021: 15 points] 2. In 2020, would the company report a current asset or a current liability on the balance sheet? Figure out the amount of current asset or a current liability related to the long-term construction to be reported on the balance sheet in 2020. 15 points (Hint: First figure out the ending balances for CIP and Billings account at the end of 2020) 3.If a contract doesn't qualify for revenue recognition over time, how much of current asset or a current liability related to the long-term construction will be reported on the balance sheet in 2020? 15 points) (Hint: First figure out the ending balances for CIP and Billings account at the end of 2020)