Question: Problem 1 (21 marks) BUSI 2001 Intermediate Accounting I Assignment 8 (Topic 15) Due November 28, 2021 at 11:59 EST Hart Construction which has a
Problem 1 (21 marks)
BUSI 2001 Intermediate Accounting I Assignment 8 (Topic 15) Due November 28, 2021 at 11:59 EST
Hart Construction which has a calendar year end, has entered into a non-cancellable fixed priced contract of $7,500,000 beginning January 1, 2018 to build a parking complex. It has been estimated that the parking complex will be complete by September 30, 2020. The following data pertains to the construction period:
| 2018 | 2019 | 2020 | |
| Costs during the year | $ 3,200,000 | $ 2,700,000 | $ 1,700,000 |
| Estimated costs to complete | $ 3,300,000 | $ 1,000,000 | $0 |
| Progress Billings | $ 2,700,000 | $ 2,750,000 | $ 2,050,000 |
Required:
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A) Determine the revenue and profit/loss that should be recorded on this contract in 2019. Prepare the journal entry.
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B) What is the balance in the CIP and the billings accounts by the end of 2019? How will they be presented in the balance sheet?
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C) Prepare the journal entries to record the revenue and profit/loss in 2020.
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D) Assume the company cannot measure its progress and has to use the completed contact
method. Prepare the journal entries.
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