Revenue Recognition for Long Term Construction Contracts 1. During 2021, the Greeley Company began construction of a bridge for Weld County, The contract price is $300,000 and the bridge will take 18 months to construct. The table below summarizes costs incurred, estimated costs to complete, amounts billed to Weld County and progress payments received: Actual costs incurred during the year Actual costs incurred in prior years Cumulative actual costs to date Estimated costs to complete at end of year Total costs (actual + estimated) 2021 $50,000 0 50,000 190,000 $240,000 2022 $160,000 50,000 210,000 35,000 $245,000 2023 $40,000 210,000 250,000 0 $250,000 Amounts billed to customer this year Cash collections this year $30,000 $25,000 $150,000 $140,000 $120,000 $135,000 Contract Price $300,000 Requirements: A. Assume the contract qualifies for recognizing revenue over time (percentage of completion method) 1. Prepare a table to determine the amount of construction revenue, construction costs, and gross profit/loss to be recognized in each of the three years. Round the percentage complete to 2 decimal places. 2. Prepare the necessary journal entries for each of the three years to account for construction costs, construction revenues, contract billings, and cash collections. Also close the construction accounts in 2023. 3. Prepare a partial balance sheet for 2021. B. Assume the contract does not qualify for recognizing revenue over time (completed contract method) and repeat steps 1, 2, and 3 above