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Stoney Construction Co

Accounting

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Stoney Construction Co. enters a 3-year contract to build a new warehouse facility. Stoney follows Completed Contract Method under U.S. GAAP and adopts "progress billing" accounting for its construction project. Information for Years 1, 2, and 3 is shown below:

	Year 1	Year 2	Year 3
Sales price	$   2,800,000	$   2,800,000	$   2,800,000
Estimated costs	$   1,600,000	$   2,000,000	$   2,000,000
Costs incurred to date (paid in cash)	$      400,000	$      900,000	$   2,000,000
Billed to date	$      250,000	$   1,150,000	$   2,800,000
Received in cash to date	$      190,000	$      950,000	$   2,800,000

 

b. What is the final journal entry for Year 3, assuming all the amounts as originally stated? Please select account names from accounts provided in Appendix. Please indicate the element of each account you use. (Hint: there will be two pairs of debits and credits, i.e., two journal entries. 0.25 points each, total 0.5 points.) 

 

i. Entry 1 ii. Entry 2

 

Appendix: List of Account Names

 

Cash in advance

Construction in progress

Construction expense

Contracts payable

Contracts receivable Customer advance

Income summary

Prepaid expense

Progress billings

Revenue

Unearned revenue