Watson Construction Company contracted to build a plant for $1,250,000. Construction started in January of Year 1 and was completed in November of Year 2. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. As of December 31 Costs incurred Year 1 Year 2 $725,000 $300,000 Estimated costs to complete 312,500 Billings Cash collections 675,000 575,000 625,000 625,000 Required Point in Time Over Time b. Provide the Year 1 and Year 2 journal entries for Watson 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. Percent Complete Numerator Denominator At the end of Year 1 $ 0 = $ Result 0 Note: Use the result EXACTLY as displayed above in the calculations below. Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). Year 1 Account Name 1. Dr. Cr. 0 0 0 0 To record constructions costs incurred 2. 0 0 0 0 To record progress billings 3. 0 0 0 0 To record collections 4. 0 0 0 0 0 0 To recognize revenues and expenses 5. 0 0 0 0 To close out accounts Year 2 1. 2. 3. 4. 5. Account Name To record constructions costs incurred To record progress billings To record collections To recognize revenues and expenses To close out accounts Dr. Cr. 0 0 0 0 < < 0 0 0 0 0 0 0 0 > > > 0 0 0 0 0 0 0 0 0 0