MSK Construction Company contracted to construct a factorybuilding for $525,000. Construction started during 2019...

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Accounting

MSK Construction Company contracted to construct a factorybuilding for $525,000. Construction started during 2019 and wascompleted in 2020. Information relating to the contractfollows:
2019 2020
Costs incurred during theyear $ 290,000 $ 150,000
Estimated additional cost tocomplete 145,000 —
Billings during the year 260,000 265,000
Cash collections during theyear 240,000 285,000
Required:
Record the preceding transactions in MSK’s books assuming itrecognizes revenue over time and uses costs incurred to measure theextent to which its performance obligation has been satisfied.
Record the preceding transactions in MSK’s books assuming itrecognizes revenue at a point in time when control of the completedfactory is transferred to the customer at the end of theproject.

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In: AccountingMSK Construction Company contracted to construct a factorybuilding for $525,000. Construction started during 2019 and...MSK Construction Company contracted to construct a factorybuilding for $525,000. Construction started during 2019 and wascompleted in 2020. Information relating to the contractfollows:20192020Costs incurred during theyear$290,000$150,000Estimated additional cost tocomplete145,000—Billings during the year260,000265,000Cash collections during theyear240,000285,000Required:Record the preceding transactions in MSK’s books assuming itrecognizes revenue over time and uses costs incurred to measure theextent to which its performance obligation has been satisfied.Record the preceding transactions in MSK’s books assuming itrecognizes revenue at a point in time when control of the completedfactory is transferred to the customer at the end of theproject.

	2019		2020
Costs incurred during theyear	$	290,000	$	150,000
Estimated additional cost tocomplete		145,000		—
Billings during the year		260,000		265,000
Cash collections during theyear		240,000		285,000