Assume that ABC Company has contracted to build an office building for Big Co. for $7,200,000....

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Assume that ABC Company has contracted to build an office building for Big Co. for $7,200,000. Big Co. has title to the office building during the entire construction period. The construction costs were estimated initially to be $5,120,000. Other relevant data is as follows: Current period costs Estimated additional costs to complete Progress billings Collection on billings-current year Additional information: 2020 2021 2022 $1,320,000 $2,320,000 $1,920,000 3,080,000 1,560,000 0 1,080,000 2,800,000 3,320,000 900,000 2,700,000 3,600,000 Contract price remained unchanged throughout the construction. Costs currently incurred were actual costs for each of the construction years. Required: 1. Calculate the revenues to be recognized for the years 2020 and 2021 assuming the company uses the percentage of completion method. Calculate the percent complete to the nearest whole percent. (4 marks) 2. Prepare journal entries for ABC Company for 2020 using the percentage of completion method. (9 marks) Assume that ABC Company has contracted to build an office building for Big Co. for $7,200,000. Big Co. has title to the office building during the entire construction period. The construction costs were estimated initially to be $5,120,000. Other relevant data is as follows: Current period costs Estimated additional costs to complete Progress billings Collection on billings-current year Additional information: 2020 2021 2022 $1,320,000 $2,320,000 $1,920,000 3,080,000 1,560,000 0 1,080,000 2,800,000 3,320,000 900,000 2,700,000 3,600,000 Contract price remained unchanged throughout the construction. Costs currently incurred were actual costs for each of the construction years. Required: 1. Calculate the revenues to be recognized for the years 2020 and 2021 assuming the company uses the percentage of completion method. Calculate the percent complete to the nearest whole percent. (4 marks) 2. Prepare journal entries for ABC Company for 2020 using the percentage of completion method. (9 marks)

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