Percentage-Of-Completion Method Chickadee Construction Was Awarded a Contract to Construct

question 378

Essay

Percentage-of-completion method Chickadee Construction was awarded a contract to construct an interchange at the junction of two major freeways in a Canadian city at a total contract price of $10,000,000.The estimated total costs to complete the project were $8,000,000, and it is expected to take two years. Instructions Using the percentage-of-completion method and the cost-to-cost basis,
a)Prepare the journal entry to record construction costs of $4,400,000 for the first year.
b)Prepare the journal entry to record progress billings of $5,000,000 for the first year.
c)Prepare the journal entry to recognize the revenue and gross profit for the first year.

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