BUSI 2001 Study Guide - Quiz Guide: Debits And Credits, Iphone 6, Current Liability
24 Jan 2016
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Agenda: long-term contracts, revenue from contracts with customers. Long-term contracts: contracts that extend for periods in excess of 1 year (continuous earnings process). For any year n of a profitable l-t contract . Profit n = revenues n costs n. Or (total contract profit n * % of completion n) (total contract profit n-1 * % of completion n-1) 1- to record actual construction costs: d/contract in progress (inventory account), c/miscellaneous accounts. 2- to record progress billings: d/accounts receivable; c/billings (billings is a contra-account to cip) 3- for the cash collected: d/ cash, c/accounts receivable. 4- to recognize the profit or loss of the year: d/contract expenses, C/revenues; and balance to contract in progress (debit for profit; credit for loss) Debit billings and credit cip (accounts are closed) 650,000: prepare the journal entries related to the construction contract in 2007 and 2008, determine how this contract will be presented in the balance sheet in 2007 and 2008.
