Prepare the journal entries to recognize revenue and cost

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Problem - Santana, Inc. builds houses and accounts for their projects using the percentage-of- completion method. In 2020, Santana began a construction project with a total contract price of $ 3,000,000. Other details follow:

 

2020

2021

Cost incurred during the year

$600,000

$1,300,000

Estimated cost to complete, as of 12/31

1,200,000

0

Billings during the year

1,800,000

1,200,000

Collections during the year

1,350,000

1,000,000

Required -

A) Prepare a complete set of journal entries for 2020.

B) Calculate the amount of the contract price that would be recognized as revenue in 2021.

C) Assume Santana, Inc. uses the completed-contract method. Prepare the journal entries to recognize revenue and cost at the end of the project in 2021.

Reference no: EM132739904

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