80.2K

Verified Solution

Link Copied!

one question

\% Completion and Completed Contract The BAD BOYS (BB) Construction Company uses the percentage-of-completion method of accounting. In 2020, BB began work under a two-year contract to construct a state-of the art accounting classroom at a contract price of $5,000,000. Other details follow: Instructions: - What portion of the total contract price would be recognized as revenue and gross profit in 2020 under both the \% of completion and completed contract methods? - Prepare a complete set of journal entries for 2020 using the percentage-of-completion method and the completed contract method. - Complete the "T" accounts and partial IS and partial BS under each method. Journal Entries '20 % Completion C1. To Record Actual Construction Costs: '20 Completed Contract DR: CR: C2. To Record Progress Billings: DR: C3. To Record Cash Collections: \begin{tabular}{l|l} \hline \multicolumn{2}{|c|}{ CR: } \\ \hline To Record Recognized GP \& Revenue: & \\ \hline DR: & \\ \hline DR: & \\ \hline CR: & \\ \hline CIP- Completed Contract & \\ \hline \end{tabular} Income Statement % of Completion ' 20 Partial Balance Sheet % Completion ' 20 Current Assets Inventory Costs \& Recognized Profits in Excess of Billings No journal entries are required For 2021 compute the revenue an a. \% of completion method: b. Completed contract method

Answer & Explanation Solved by verified expert

See Answer