Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng

Exercise 37

Percentage-of-completion method. Apple Contractors, an 80%- owned subsidiary, is constructing a warehouse for its parent, Plum Corporation. The following information is available on December 31, 2011:
Percent of completion................................. 60%
Costs incurred to date................................. $120,000
Estimated costs to complete............................. 80,000
Contract price....................................... 250,000
Amount billed to date (no amounts collected)............... 150,000
Apple uses the percentage-of-completion method to account for its long-term contracts.
Record the journal entries that each of the two companies would have made relative to the construction. Prepare a partial trial balance using the data from your entries, and show the eliminations relating to the contract for the December 31, 2011, consolidated worksheet.