10. Dixon Construction Company was awarded a contract to construct an interchange at the junction of U. S. 94 and Highway 30 at a total contract price of $15,000,000. The estimated total costs to complete the project were $12,000,000. (a) Make the entry to record construction costs of $7,200,000, on construction in process to date. (b) Make the entry to record progress billings of $4,000,000. (c) Make the entry to recognize the profit that can be recognized to date, on a percentage-of - completion basis.

Journal Entry

Explanation:

Books of (Dixon Construction Company)

Journal Entry

Date Account Title and Explanation Debit Credit

A. Construction in process A/c Dr. $7,200,000

Cash / Accounts payable A/c $7,200,000

(Being construction cost paid)

B. Accounts receivables A/c Dr. $4,000,000

Billing in progress A/c $4,000,000

(Being record of billing in progress)

C. Construction expenses A/c Dr. $7,200,000

Construction in process A/c Dr. $1,800,000

Revenue from construction A/c $9,000,000

(Being income generate from contract)

Note:

Revenue from construction = Total contract (Construction in process / estimated total costs to complete)

Revenue from construction = $15,000,000 ($7,200,000 / $12,000,000)

Revenue from construction = $9,000,000

Construction in process = Revenue from construction - Construction expenses

Construction in process = $9,000,000 - $7,200,000

Construction in process = $1,800,000