Intermediate Accounting: P8-21 Perfectionist Construction Company was the low bidder

Intermediate Accounting
P8-21 Percentage of Completion Accounting
Perfectionist Construction Company was the low bidder on an office building construction contract. The contract bid was $9,000,000, with an estimated cost to complete the project of $7,000,000. The contract period was 30 months starting May 1, 2014.Because of changes requested by the customer, the contract price was adjusted downward to $8,600,000 on May 1, 2015. A record of construction activities for the years 2014–2017 is as follows:
Actual Cost Progress Billings Cash Receipts
2014 1,900,000 2,500,000 1,900,000
2015 3,600,000 3,400,000 3,100,000
2016 1,670,000 2,700,000 2,500,000
2017 1,100,000

The estimated cost to complete the contract as of the end of each accounting period is:
2014 5,150,000
2015 1,600,000
2016 -
2017

Prepare all journal entries and the relevant balance sheet entries for 2014-2016 under the percentage-of-completion method of revenue recognition (Note: Round percentage to two decimal places for percentage completed).
Powered by