Watson Construction Company contracted to build a plant for $500,000. Construction started in January 2020 and was completed in November 2021. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow.

	2020	2021
Costs incurred during year	$290,000	$120,000
Estimated additional costs to complete	125,000	0
Billings during year	270,000	230,000
Cash collections during year	250,000	250,000

• Revenue Recognized at a Point in Time
• Revenue Recognized Over Time

a. Provide the 2020 and 2021 journal entries for Watson 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.

• Note: If a journal entry isn't required for the transaction, select "N/A" as the account  names and leave the Dr. and Cr. answers blank (zero).

 

Date	Account Name	Dr.	Cr.
2020 (1)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	Cash, Payables, etc.	Answer	Answer
2020 (2)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2020 (3)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2020 (4)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record revenue from contract.
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record cost of contract.
2021 (1)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	Cash, Payables, etc.	Answer	Answer
2021 (2)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2021 (3)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2021 (4)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record revenue from contract.
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record cost of contract.