JOURNAL ENTRIES

1 BILLINGS
A/R
P/B P/B - CURRENTS ASSET or CURRENT LIABILITIES
if the CIP (1M) > P/B (900K) = CURRENT ASSETS
2 COLLECTION OF A/R if the CIP (750K) < P/B (900K) = CURRENT LIABILITIES
CASH
A/R

3 INCURRENCE OF COST
DM
CIP/ Contract
DL Cost
OH
CASH

CONTRACT PRICE = REVENUE FOR THE WHOLE CONTRACT

CLOSING YEAR ENTRIES (PERCENTAGE OF COMPLETION METHOD)

1 CIP CIP - ASSET ACCOUNT PARTICULARLY INVTY ACCT.
DM
DL
OH

2 CIP (GP)
CONST COST (COGS)
REVENUE

CIP = actual cost incurred + GP

CIP = Revenue (ytd amount)

CLOSING YEAR ENTRIES (ZERO PROFIT METHOD)

1 CIP CIP - ASSET ACCOUNT PARTICULARLY INVTY ACCT.
DM
DL
OH

2 CONST COST (COGS)

REVENUE
Revenue is always equal to Cost (unless it will be finished)
Gross Profit will be realized at the end of the contract
ILLUSTRATION
REVENUE
CONSTRUCTION IN PROGRESS (CIP)
REALIZED GROSS PROFIT (RGP)
2021 2022 2023
COST INCURRED 2,760,000 3,540,000 500,000
BILLINGS 50% 30% 20%
COLLECTIONS 90% 90% BALANCE
ESTD COST TO COMP 4,140,000 700,000 -

SALES 9,000,000 9,000,000 9,000,000

COS 2,760,000 6,300,000 6,800,000
ESTD COST TO COMP 4,140,000 700,000 -
TOTAL COST 6,900,000 7,000,000 6,800,000
POC = COST INCURRED / TOTAL COST 40% 90% 100%
EXPECTED GP 2,100,000 2,000,000 2,200,000
REALIZED GROSS PROFIT (RGP) 840,000 1,800,000 2,200,000
LESS: GP LY 0 840,000 1,800,000
REALIZED GROSS PROFIT (RGP) 840,000 960,000 400,000
ILLUSTRATION (POC)
REVENUE
CONSTRUCTION IN PROGRESS (CIP)
REALIZED GROSS PROFIT (RGP)
2021 2022 2023
COST INCURRED 2,760,000 3,540,000 500,000
BILLINGS 50% 30% 20%
COLLECTIONS 90% 90% BALANCE
ESTD COST TO COMP 4,140,000 700,000 -
CONTRACT PRICE 9,000,000

YR 2021 YR 2022 YTD YR 2023 YTD

POC 40% 50% 90% 10% 100%
REVENUE 3,600,000 4,500,000 8,100,000 900,000 9,000,000
COST (ACTUAL) 2,760,000 3,540,000 6,300,000 500,000 6,800,000
GP 840,000 960,000 1,800,000 400,000 2,200,000
2,200,000

REVENUE (I/S) 3,600,000 4,500,000 900,000 9,000,000

CIP (B/S) 3,600,000 8,100,000 9,000,000
RGP 840,000 960,000 400,000

CIP = actual cost incurred + GP

CIP = Revenue (ytd amount)
 1,825,000

YR 1 YR 2 YTD YR 3
POC 25% 55% 80% 20%
REVENUE 456,250 1,003,750 1,460,000 365,000
COST (ACTUAL) 350,000 930,000 1,280,000 300,000
GP 106,250 73,750 180,000 65,000

REVENUE (I/S) 456,250 1,003,750 365,000 1,825,000

CIP (B/S) 456,250 1,460,000 1,825,000
RGP 106,250 73,750 65,000

SALES 1,825,000 1,825,000 1,825,000

COS 350,000 1,280,000 1,580,000
ESTD COST TO COMP 1,050,000 320,000 -
TOTAL COST 1,400,000 1,600,000 1,580,000
POC = COST INCURRED 25% 80% 100%
EXPECTED GP 425,000 225,000 245,000
GP 106,250 180,000 245,000
LESS: GP LY 0 106,250 180,000
GP 106,250 73,750 65,000
YTD
100%
1,825,000
1,580,000
245,000
245,000
 4,500,000

2,021 2,022 YTD 2,023

POC 40% 50% 90% 10%
REVENUE 1,800,000 2,250,000 4,050,000 450,000
COST (ACTUAL) 1,380,000 1,770,000 3,150,000 250,000
GP 420,000 480,000 900,000 200,000

REVENUE (I/S) 1,800,000 2,250,000 450,000 4,500,000

CIP (B/S) 1,800,000 4,050,000 4,500,000
RGP 420,000 480,000 200,000

2021 2022 2023

SALES 4,500,000 4,500,000 4,500,000
Cost incurred to date 1,380,000 3,150,000 3,400,000
ESTD COST TO COMP 2,070,000 350,000 -
TOTAL COST 3,450,000 3,500,000 3,400,000
POC = COST INCURRED / 40% 90% 100%
EXPECTED GP 1,050,000 1,000,000 1,100,000
GP 420,000 900,000 1,100,000
LESS: GP LY 0 420,000 900,000
GP 420,000 480,000 200,000

2021 2022 2023

COST INCURRED 1,380,000 1,770,000 250,000
BILLINGS 50% 30% 20%
COLLECTIONS 85% 85% BALANCE
ESTD COST TO COMP 2,070,000 350,000 -
CONTRACT PRICE 4,500,000
 YR 2021 YR 2022 YTD YR 2023 YTD
REVENUE 1,380,000 1,770,000 3,150,000 1,350,000 4,500,000
COST (ACTUAL) 1,380,000 1,770,000 3,150,000 250,000 3,400,000
GP - - - 1,100,000 1,100,000

REVENUE (I/S) 1,380,000 1,770,000 1,350,000 4,500,000

CIP (B/S) 1,380,000 3,150,000 4,500,000
RGP - - 1,100,000

Revenue is always equal to Cost (unless it will be finished)

Gross Profit will be realized at the end of the contract
YTD
100%
4,500,000
3,400,000
1,100,000
1,100,000
ILLUSTRATION (ZPM)
REVENUE
CONSTRUCTION IN PROGRESS (CIP)
REALIZED GROSS PROFIT (RGP)
2021 2022 2023
COST INCURRED 2,760,000 3,540,000 500,000
BILLINGS 50% 30% 20%
COLLECTIONS 90% 90% BALANCE
ESTD COST TO COMP 4,140,000 700,000 -
CONTRACT PRICE 9,000,000

YR 2021 YR 2022 YTD YR 2023 YTD

REVENUE 2,760,000 3,540,000 6,300,000 2,700,000 9,000,000
COST (ACTUAL) 2,760,000 3,540,000 6,300,000 500,000 6,800,000
GP - - - 2,200,000 2,200,000

REVENUE (I/S) 2,760,000 3,540,000 2,700,000 9,000,000

CIP (B/S) 2,760,000 6,300,000 9,000,000
RGP - - 2,200,000

Revenue is always equal to Cost (unless it will be finished)

Gross Profit will be realized at the end of the contract