Problem 3-3 Revenue recognition over time and at a point in time under ASC Topic 606 (LO3-4)

MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 2019 and was completed in 2020. Information relating to the contract follows:

Problem 3-3 Revenue recognition over time and at a point in time under ASC Topic 606 (LO3-4) MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 2019 and was completed in 2020. Information relating to the contract follows: 2020 $150,000 Costs incurred during the year Estimated additional cost to complete Billings during the year Cash collections during the year 2019 $ 290,000 145,000 260,000 240,000 265,000 285,000 Required: 1. Record the preceding transactions in MSK's books assuming it recognizes revenue over time and uses costs incurred to measure the extent to which its performance obligation has been satisfied. 2. Record the preceding transactions in MSK's books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project. Required 1 Required 2 Record the preceding transactions in MSK's books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Credit No 1 Date 2019 General Journal Construction in progress Cash Debit 290,000 290,000 2019 260,000 Accounts receivable Billings on contract 260,000 2019 240,000 Cash Accounts receivable 240,000 2019 150,000 X Construction in progress Cash 150,000 X 2020 265,000 X Accounts receivable Billings on contract 265,000 2020 285,000 X Cash Accounts receivable 285,000 X 7 2020 Construction in progress Construction expense Construction revenue 85,000 440,000 x 525,000 X 2020 525,000 Billings on contract Construction in progress 525,000 Required 1 Required 2 Record the preceding transactions in MSK's books assuming it recognizes revenue over time and uses costs incurred to measure the extent to which its performance obligation has been satisfied. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) General Journal Credit No 1 Date 2019 Debit 290,000 / Construction in progress Cash 290,000 2019 260,000 Accounts receivable Billings on contract 260,000 2019 240,000 Cash Accounts receivable 240,000 2019 Construction in progress Construction expense Construction revenue 60,000 290,000 350,000 2020 150,000 Construction in progress Cash 150,000 2020 265,000 Accounts receivable Billings on contract 265,000 Problem 3-3 Revenue recognition over time and at a point in time under ASC Topic 606 (LO3-4) MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 2019 and was completed in 2020. Information relating to the contract follows: 2020 $150,000 Costs incurred during the year Estimated additional cost to complete Billings during the year Cash collections during the year 2019 $ 290,000 145,000 260,000 240,000 265,000 285,000 Required: 1. Record the preceding transactions in MSK's books assuming it recognizes revenue over time and uses costs incurred to measure the extent to which its performance obligation has been satisfied. 2. Record the preceding transactions in MSK's books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project. Required 1 Required 2 Record the preceding transactions in MSK's books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Credit No 1 Date 2019 General Journal Construction in progress Cash Debit 290,000 290,000 2019 260,000 Accounts receivable Billings on contract 260,000 2019 240,000 Cash Accounts receivable 240,000 2019 150,000 X Construction in progress Cash 150,000 X 2020 265,000 X Accounts receivable Billings on contract 265,000 2020 285,000 X Cash Accounts receivable 285,000 X 7 2020 Construction in progress Construction expense Construction revenue 85,000 440,000 x 525,000 X 2020 525,000 Billings on contract Construction in progress 525,000 Required 1 Required 2 Record the preceding transactions in MSK's books assuming it recognizes revenue over time and uses costs incurred to measure the extent to which its performance obligation has been satisfied. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) General Journal Credit No 1 Date 2019 Debit 290,000 / Construction in progress Cash 290,000 2019 260,000 Accounts receivable Billings on contract 260,000 2019 240,000 Cash Accounts receivable 240,000 2019 Construction in progress Construction expense Construction revenue 60,000 290,000 350,000 2020 150,000 Construction in progress Cash 150,000 2020 265,000 Accounts receivable Billings on contract 265,000