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Stoney Construction Co
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 |
Expert Solution
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