Craft Construction
Craft Construction Entered into a Contract to Construct

question 75

Essay

Craft Construction
Craft Construction entered into a contract to construct a generator station for a utility customer. The project was started in 2016 and completed in 2017. Cost and other information is presented below.
$$\begin{array} { l r c } & \underline { 2016 } & \underline { 2017 } \\\text { Costs incurred during the year } & \$ 225,000 & \$ 550,000 \\\text { Estimated costs to complete } & 450,000 & - 0 - \\\text { Billings during the year } & 200,000 & 700,000 \\\text { Cash collections during the year } & 150,000 & 750,000\end{array}$$
-Refer to Craft Construction. Assume that Craft uses the completed-contract method for revenue recognition. Make the appropriate journal entries for 2016 and 2017 for Craft Company.

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Definitions:

Proprietorship

A business structure owned by a single individual who is responsible for its liabilities and entitled to its profits.

Taxed

The imposition of a financial charge or other levy upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Double Taxation

A taxation principle referring to income taxes that are paid twice on the same source of income, common in C-type corporations where income is taxed at both the corporate and shareholder levels.

Corporate

Relating to a large company or group of companies authorized to act as a single entity.