Precision Construction has agreed to build a 5-story office building for the Mountain States Bank Corporation.

The contract calls for a contract price of $15,000,000 for the building, with progress payments being made by

Mountain States as the construction proceeds. The period of construction is estimated to be 30 months. The con-

tract is signed on February 1, 2020, and construction begins immediately. Precision Construction uses the cost-

to-cost method to measure the completion of its performance obligations. The building is completed and turned

over to Mountain States Bank on December 1, 2022. Data on costs incurred, estimated costs to complete, prog-

ress billings, and progress payments over the period of construction follow.

$ thousands 2020. 2021. 2022

Costs incurred this period. . . . . . . . . . . . . . . . . . . . . $ 1,500 $ 7,875 $ 3,825

Costs incurred to date . . . . . . . . . . . . . . . . . . . . . . . 1,500 9,375 13,200

Estimated costs to complete at year-end . . . . . . . . . 10,500 3,125 0

Estimated total costs of project. . . . . . . . . . . . . . . . . 12,000 12,500 13,200

Progress billings this period . . . . . . . . . . . . . . . . . . . 1,200 6,000 7,800

Progress payments received this period . . . . . . . . . 825 6,300 7,875

Required

a. Provide the 2020, 2021, and 2022 journal entries assuming revenue is recognized at a point in time. Provide

entries for (1) construction costs incurred, (2) progress billings, (3) cash collections, and (4) revenues and

expenses.

b. Provide the 2020 and 2021 journal entries assuming revenue is recognized over time. Provide entries for

(1) construction costs incurred, (2) progress billings, (3) cash collections, (4) revenues and expenses, and

(5) to close out accounts upon completion of the contract.

c. For part a, prepare the income statement and balance sheet presentations for this contract for each of the

years 2020, 2021, and 2022.

d. For part b, prepare the income statement and balance sheet presentations for this contract for each of the years 2020,2021,and 2022