MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 20X1 and was completed in 20X2. Information relating to the contract follows:
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MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 20X1 and was completed in 20X2. Information relating to the contract follows:
20X1 20X2
Costs incurred during the year $290,000 $150,000
Estimated additional cost to complete 145,000 —
Billings during the year 260,000 265,000
Cash collections during the year 240,000 285,000
Required: Record the preceding transactions in MSK’s books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project.
Please number transactions
- 1Prepare the entry to record the construction costs incurred. Hint: Use Cash, payables, materials, etc.
- 2Prepare the entry to record the amounts billed to the customer.
- 3Prepare the entry to record the cash receipts from the customer.
- 4Prepare the entry to record the construction costs incurred. Hint: Use Cash, payables, materials, etc.
- 5Prepare the entry to record the amounts billed to the customer.
- 6Prepare the entry to record the cash receipts from the customer.
- 7Prepare the entry to record revenue, expense, and completion of the project.
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