Question

Flounder, Inc. began work on a $7,622,000 contract in 2020 to construct an office building. During 2020, Flounder, Inc. incurred costs of $1,681,750, billed its customers for $1,162,000, and collected $909,000. At December 31, 2020, the estimated additional costs to complete the project total $3,123,250.

Prepare Flounder’s 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title to record costs incurred	enter a debit amount	enter a credit amount
enter an account title to record costs incurred	enter a debit amount	enter a credit amount
(To record costs incurred.)
enter an account title to record billings	enter a debit amount	enter a credit amount
enter an account title to record billings	enter a debit amount	enter a credit amount
(To record billings.)
enter an account title to record collections	enter a debit amount	enter a credit amount
enter an account title to record collections	enter a debit amount	enter a credit amount
(To record collections.)
enter an account title to recognize revenue	enter a debit amount	enter a credit amount
enter an account title to recognize revenue	enter a debit amount	enter a credit amount
enter an account title to recognize revenue	enter a debit amount	enter a credit amount
(To recognize revenue.)

Answer 1

Answer :

Journal entries in the books of flounder inc :

Date	Account title	Debit	Credit
	Construction in progress	$1,681,750
	Materials , cash payable		$1,681,750
	Accounts receivable	$1,162,000
	Billing on construction in process		$1,162,000
	Cash	$909,000
	Accounts receivable		$909,000
	Construction in process {($1,681,750 ÷ $4,805,000) × $2,817,000}	$985,950
	Construction expenses	$1,681,750
	Revenue from long term contracts ($7,622,000 × 35%)		$2,667,700