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Prepare all journal entries required for Bridgeport Corp

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Problem - In 2019, Bridgeport Corp. was awarded a contract to build a bridge in a suburb of Montreal at a total contract price of $10,000,000. When the contract was signed, the estimated total costs to complete the project were $8,000,000 and this number has not changed. 20% of the revenue on the contract (or $2,000,000) was already recognized in 2019 based on the percent complete at December 31, 2019. The company follows IFRS and uses the percentage-of-completion method using the cost-to-cost basis for all such contracts.

The following information relates to the year ending December 31, 2020:

Bridgeport incurred construction costs of $4,800,000 during the year.

The customer was billed for non-refundable progress billings of $2,200,000.

Bridgeport collected $150,000 in cash on progress billings during the year.

Required - Show all calculations and analysis to get full marks. Round all numbers to the nearest dollar. Prepare all journal entries required for Bridgeport Corp. for the year ending December 31, 2020 relating to this contract.

Reference no: EM132720431

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