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9 September, 05:17

Kline Corp. recognizes revenue over time to account for long-term contracts. The contract price is $5 million, total construction costs are $3.75 million, actual costs incurred during the first year are $1.5 million, and the revenue recognized is $2 million. The journal entry to record revenue during year 1 is: (Select all that apply.) Credit: Revenue $2 million.

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  1. 9 September, 08:43
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    The journal entry which is to be recorded is shown below:

    Explanation:

    Contract Price A/c ... Dr $500,000

    Cost of constructionA/c ... Dr $150,000

    Revenue A/c ... Cr $2,000,000

    As the company recording the revenue, so the revenue account is credited. It involves the cost of construction which is debited and the contract price account is debited.

    Note: The options are missing. So, proving the journal entry in the answer.
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