Respuesta :
Answer:
Journal Entry
Explanation:
Books of (Dixon Construction Company)
Journal Entry
Date Account Title and Explanation Debit Credit
A. Construction in process A/c Dr. $7,200,000
Cash / Accounts payable A/c $7,200,000
(Being construction cost paid)
B. Accounts receivables A/c Dr. $4,000,000
Billing in progress A/c $4,000,000
(Being record of billing in progress)
C. Construction expenses A/c Dr. $7,200,000
Construction in process A/c Dr. $1,800,000
Revenue from construction A/c $9,000,000
(Being income generate from contract)
Note:
Revenue from construction = Total contract(Construction in process / estimated total costs to complete)
Revenue from construction = $15,000,000($7,200,000 / $12,000,000)
Revenue from construction = $9,000,000
Construction in process = Revenue from construction - Construction expenses
Construction in process = $9,000,000 - $7,200,000
Construction in process = $1,800,000
If Dixon Construction Company was awarded a contract to construct an interchange at the junction of U.S. 94 and Highway 30 at a total contract price of $15,000,000. The estimated total costs to complete the project were $12,000,000. The journal entries are:
(a) The entry to record construction costs of $7,200,000, on construction in process to date will be:
Debit Construction in Process $7,200,000
Credit Materials, Cash, Payables $7,200,000
(To record construction costs)
(b) The entry to record progress billings of $4,000,000.
Debit Accounts Receivable $4,000,000
Credit Billings on Construction in Process $4,000,000
( To record progress billings)
(c) The entry to recognize the profit that can be recognized to date, on a percentage-of- completion basis.
Debit Construction Expenses $7,200,000
Debit Construction in Process (60% complete) $1,800,000
($9,000,000-$7,200,000)
Credit Revenue from Long-Term Contracts $9,000,000
[($7,200,000÷$12,000,000=60%)×$15,000,000]
(To record percentage-of- completion basis profit)
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