Buildit Corp. was contracted to construct a building for $ 1,600,000. the contract provided for progress payments. Buildit’s accounting year ends 31 December. Work began under the contract on 1 March 20X3 and was completed on 30 November 20X5. Construction activities are summarized below by year:
20X3 Construction costs incurred during the year, $ 470,000; estimated costs to complete, $ 830,000; progress billings during the year, $ 380,000; and collections, $ 290,000.
20X4 Construction costs incurred during the year, $ 700,000; estimated costs to complete, $ 210,000; progress billing during the year, $ 990,000; and collections, $ 870,000.
20X5 Construction costs incurred during the year, $ 195,000. Because the contract was completed, the remaining balance was billed and later collected in full per the contract.
1. Give Buildit’s journal entries to record these events. Assume that percentage- of- comple-tion is measured by the ratio of costs incurred to date divided by total estimated con-struction costs.
2. Provide the balances that would appear on the SCI and SFP for this contract for each year.