Bob Ltd signs a contract on 1 April 2018 to build an office building. The construction is scheduled to commence 1 July 2018 and the estimated date of completion is 30 June 2021. The cost of the building is estimated to be $155m and the total contract price is fixed at $180m. The following data relates to the construction period:

	For the year ended 30 June
	2019	2020	2021
	$000	$000	$000
Costs to date	46,500	108,500	155,000
Estimated Costs to complete	108,500	46,500	-
Progress billings to date	50,000	120,000	180,000
Cash received to date	25,000	115,000	180,000

Assume that actual costs and cash collections coincide with expectations and that cost (an input measure) is used as the basis for assessing progress on the construction contract.

a.Determine the percentage of completion for 2019, 2020 and 2021.

	2019	2020	2021
	$000	$000	$000
Costs to date
Costs incurred for the year
Estimated costs to complete
Estimated total cost
Per cent of completion (POC)

b. Calculate the gross profit for 2019, 2020 and 2021.

	2019	2020	2021
	$000	$000	$000
Estimated total gross profit
POC x Estimated total gross profit
Less Gross profit recognised in previous years
= Gross profit recognised for the year
Construction revenue for the year

c. Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.

			2019	2020	2021
(i)	To record costs incurred:
(ii)	To record billings to customers:
(iii)	To record cash collections:
(iv)	To record periodic income recognised: