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Prepare only the journal entries to record costs

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Reference no: EM132933937

McDonald Construction Company was the low bidder on a construction project to build an earthen dam for $1,800,000. The project began in 2020 and completed in 2021. Cost and other data are presented below:

                                                         2020                     2021

Costs incurred during the year             $ 450,000        $1,100,000

Estimated costs to complete                 1,050,000             0

Billings during the year                        400,000          1,400,000

Cash collections during the year           300,000             1,500,000

Assume that McDonald recognizes revenue on this contract over time according to percentage of completion.

Required:

Problem 1. Compute in proper format the amount of gross profit recognized during 2020 and 2021?

Problem 2. Prepare ONLY the 2020 journal entries to record costs, billings, collections, and profit recognition.

Reference no: EM132933937

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