Using the information provided in RE18-3, prepare the journal entries to record Year 1’s

(a) Construction costs,

(b) Partial billings,

(c) Cash collections,

(d) Gross profit.

In RE18-3, Clorad Corporation uses the percentage-of-completion method of accounting for construction contracts. Using the following information for Year 1, compute Clorad’s

Year 1 (of four-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