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In 2012 Gurney Construction Company agreed to construct an apartment building at a price of $1,284,000. The information relating to the costs and...
In 2012 Gurney Construction Company agreed to construct an apartment building at a price of $1,284,000. The information relating to the costs and billings for this contract is shown below. 201220132014Cost incurred to date$299,600$642,000$839,950Estimated costs yet to be incurred556,400214,000-0-Customer billings to date160,500535,0001,284,000Collection of billings to date128,400342,4001,005,800(a)Assuming that the percentage-of-completion method is used.(1)Compute the amount of gross profit to be recognized in 2012 and 2013.20122013Gross profit recognized$$(2)Prepare journal entries for 2013.Description/AccountDebitCredit Construction ExpensesBillings on Construction in ProcessConstruction in ProcessAccounts ReceivableRevenues from Long-Term ContractMaterials, Cash, Payables, etc.CashMaterials, Cash, Payables, etc. Construction in ProcessRevenues from Long-Term ContractMaterials, Cash, Payables, etc.CashConstruction ExpensesAccounts ReceivableBillings on Construction in ProcessConstruction ExpensesBillings on Construction in ProcessAccounts ReceivableConstruction in ProcessMaterials, Cash, Payables, etc.Revenues from Long-Term ContractCashCashMaterials, Cash, Payables, etc.Revenues from Long-Term ContractAccounts ReceivableCashConstruction ExpensesConstruction in ProcessBillings on Construction in ProcessConstruction Expense Construction ExpensesCashBillings on Construction in ProcessConstruction in ProcessRevenues from Long-Term ContractAccounts ReceivableMaterials, Cash, Payables, etc.CashBillings on Construction in ProcessMaterials, Cash, Payables, etc.Construction in ProcessRevenues from Long-Term ContractAccounts ReceivableConstruction Expenses(b)For 2013, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement.Income Statement (2013) CashAccounts receivableConstruction ExpensesGross profit on long-term construction projectReceivables-construction in processCurrent assets:Inventories-construction in process totaling $Balance Sheet (12/31/13) Gross profit on long-term construction projectAccounts receivableCashConstruction ExpensesReceivables-construction in processCurrent assets:Inventories-construction in process totalingInventories-construction in process totalingAccounts receivableCashConstruction ExpensesCurrent assets:Receivables-construction in processGross profit on long-term construction project $Construction ExpensesAccounts receivableCashGross profit on long-term construction projectInventories-construction in process totalingCurrent assets:Receivables-construction in process$
