Revenue Recognition: 1 Background: Casper Construction Co. has a contract to constrict 8675,000 bridge at an estimated cost of $450,000. The contract is to start in Jan 2017, and the bridge is to be completed in Dec 2019. Long-term contracts frequently provide that the seller (builder) may bill the purchaser at intervals, as it reaches Various points in the project. The following data pertain to the construction period. Prepare the journal entries for 2017, 2018, and 2019, using the percentage of completion method. 4 Casper Construction Co. 5 6 7 8 9 2017 $675,000 150,000 2018 $675,000 287,400 2019 $675,000 170,100 10 11 Contract price Cost incurred current year Estimated cost to complete in future years Billings to customer current year Cash receipts from customer Current year 450,000 135,000 170,100 360,000 0 180,000 12 14 112,500 262,500 300,000 15 17 18 year 2 year 20 22 Costs incurred thus far Estimated total costs Billies Cash collected % complete 23 Contract price Revenue recognizable Revenue recognized prior year Revenue recognized current year Costs incumed cument year Gross profit cu ment year 30 33 14 To record costs of constructions Construction in Process Payable 35 35 37 To record progress billiars Accounts Receivable Billiga 40 41 To record collections Cash Accounts Receivable 45 To records and profits Construction is process Construction expenses Construction Te record the completion of the contract 51 Construction incess 52 53