Clorad Corp. contracts with a customer to construct a building. It appropriately determines that it has one performance obligation which is satisfied over time. Using the following information for Year 1:

Year 1 (of 4-year project):
Construction costs incurred during the year	$174,000
Estimated costs to complete the contract	426,000
Partial billings to customers	100,000
Collections from customers	25,000
Total contract price	1,000,000

Required:

Prepare the journal entries to record Year 1s (a) construction costs, (b) partial billings, (c) cash collections, and (d) gross profit.

CHART OF ACCOUNTS

Clorad Corp.

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
155	Construction in Progress
156	Partial Billings
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue
420	Construction Revenue

Prepare the journal entries to record Year 1s (a) construction costs, (b) partial billings, (c) cash collections, and (d) gross profit.

General Journal Instructions

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GENERAL JOURNAL

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