4. Christopher Robin Construction Co. signed a $2,000,000 contract to construct

Question

4. Christopher Robin Construction Co. signed a $2,000,000 contract to construct an office building for the State of Florida. The project will begin in 2018 and be completed in 2019. The cost of construction is expected to be $1,875,000. Below is a summary of events for 2018 and 2019: 2018 2019 Costs incurred during the year 712,500 S1,138,250 Estimated costs to complete ,037,500 Billings during the year Cash collections during the year 750,000 1,000,000 850,000150,000 Christopher Robin Construction Co. recognizes revenue upon completion when accounting for long-term contracts. Required: a. Prepare all journal entries to record costs, billings, collections, and any profit recognition for Christopher Robin's activities for 2018 only. b. Prepare any journal entry needed for profit recognition only for Christopher Robin's activities for 2019.

Explanation / Answer

(1)cost incurred :-

WIP A/c Dr. 712500

To A/c Payable. 712500

(2) Record Billing done :-

A/c Receivable Dr. 850000

To Billing. 850000

(3) Cash Dr. 750000

To A/c Receivable. 750000

(b) Record Revenue recognition in 2019:-

Billing A/c Dr. 2000000

To construction contract revenue. 2000000

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