A large construction firm, which uses the percentage of completion method, provided the following information concerning one of its contracts (contract price, $1,000). $\begin{array} { | l | l | l | l | }
\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } \
\hline \text { Cost incurred in year } & \$ 200 & \$ 300 & \$ 250 \
\hline \text { Remaining cost to complete at end of year } & & & \
\hline
\end{array}$Refer to the following two questions. The answer to question (b) depends on the answer to (a).
(a) What is the balance in construction in process at the end of year 1?
(b) Assume that $600 is the estimated remaining cost at the end of year 2. Provide the entry to record revenue for year 2. Explain the ending balance in construction in process.

Question

A large construction firm, which uses the percentage of completion method, provided the following information concerning one of its contracts (contract price, $1,000). $\begin{array} { | l | l | l | l | } 
\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } \
\hline \text { Cost incurred in year } & \$ 200 & \$ 300 & \$ 250 \
\hline \text { Remaining cost to complete at end of year } & & & \
\hline
\end{array}$Refer to the following two questions. The answer to question (b) depends on the answer to (a).
(a) What is the balance in construction in process at the end of year 1?
(b) Assume that $600 is the estimated remaining cost at the end of year 2. Provide the entry to record revenue for year 2. Explain the ending balance in construction in process.

Quizplus · Accepted Answer

The Answer of A large construction firm, which uses the percentage of completion method, provided the following information concerning one of its contracts (contract price, $1,000). $\begin{array} { | l | l | l | l | } 
\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } \
\hline \text { Cost incurred in year } & \$ 200 & \$ 300 & \$ 250 \
\hline \text { Remaining cost to complete at end of year } & & & \
\hline
\end{array}$Refer to the following two questions. The answer to question (b) depends on the answer to (a).
(a) What is the balance in construction in process at the end of year 1?
(b) Assume that $600 is the estimated remaining cost at the end of year 2. Provide the entry to record revenue for year 2. Explain the ending balance in construction in process.

A Large Construction Firm, Which Uses the Percentage of Completion