Revenue Recognition

In 2017, Chicago Construction began work on a three-year construction project to build a new performing arts complex (the "PAC"). Chicago uses the percentage-of-completion method of accounting. At the end of 2017, the company completed 25% of the project. The following financial statement information indicates the results to date for the PAC at the end of 2017:

Actual Cost incurred in 2017 $35 million

Construction in progress (as of 12/31/2017) $50 million

Accounts Receivable from construction billings (as of 12/31/2017) $60 million

Additional information: As of 12/31/2017, managements estimate of total cost indicates that the project will be profitable. Zero cash regarding the billings on the construction has been collected in 2017.

1. Provide the journal entry to record revenue, cost of goods sold from the construction for the year 2017 and journal entry to record billings (two journal entries).8 pts

2) what is the estimated cost to complete the project as of the end of 2017?

3) what is the total contract price?

4) Present part of Balance Sheet as of 12/31/2017 indicating the necessary account regarding the construction project

5) Suppose that during 2018 , the company incurred $60 million in costs on the project and that on December 31, 2018, the company estimated the costs to complete the project to be $142.5 million. Compute the amount of revenue and COGS the company should recognize in 2018. (10 pts) (Hint: this is the 2^nd year of contract)