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  • Exercise 18

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    Weri Antika
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    This document discusses revenue recognition for a construction contract using the percentage-of-completion method. It states that in 2017, $880,000 of revenue would be recognized from a $1.6 million contract, and in 2018 the remaining $1.32 million would be recognized from a $2.2 million contract. It provides journal entries to record $40,000 in construction costs, $20,000 in billings, $250,000 of cash receipts, and $220,000 of revenue recognized in 2018 using the percentage-of-completion calculation shown.

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    This document discusses revenue recognition for a construction contract using the percentage-of-completion method. It states that in 2017, $880,000 of revenue would be recognized from a $1.6 million contract, and in 2018 the remaining $1.32 million would be recognized from a $2.2 million contract. It provides journal entries to record $40,000 in construction costs, $20,000 in billings, $250,000 of cash receipts, and $220,000 of revenue recognized in 2018 using the percentage-of-completion calculation shown.

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    9 views1 page

    Exercise 18

    Uploaded by

    Weri Antika
    This document discusses revenue recognition for a construction contract using the percentage-of-completion method. It states that in 2017, $880,000 of revenue would be recognized from a $1.6 million contract, and in 2018 the remaining $1.32 million would be recognized from a $2.2 million contract. It provides journal entries to record $40,000 in construction costs, $20,000 in billings, $250,000 of cash receipts, and $220,000 of revenue recognized in 2018 using the percentage-of-completion calculation shown.

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    *EXERCISE 18-36 (15-20 Minutes)

    $ 640.000
    a) 2017: $ 1.600 .000 X $ 2.200 .000=$ 880.000
    2018: $2.200.000 (contact price) minus $880.000 (revenue organized in
    2017) = $1.320.000 (revenue organized in 2018)
    b) All $2.200.000 of the contract price is recognized in 2018)
    c) Using the percentage-of-completion method, the following entries would
    be made:

    Construction in process.................................. $40.000


    Materials, cash, payables...................... $40.000
    Accounts receivable....................................... $20.000
    Billings on construction in process...... $20.000
    Cash............................................................... 250.000
    Accounts receivable............................. 250.000
    Construction in process.................................. 240.000*
    Construction expenses................................... -20.000
    Revenue from long term contracts
    [from(a)]................................................ 220.000

    *[$2.200.000-[$640.000-$960.000)]x[($640.000-$1.600.000)]

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