Answer:
The Journal entries are as follows:
(i) Construction in progress A/c Dr. $5,104,000
To cash A/c $5,104,000
(To record the construction costs)
(ii) Accounts receivables A/c Dr. $2,980,000
To billings A/c $2,980,000
(To record the progress billings)
(iii) Cost of goods sold A/c Dr. $5,104,000
Construction in progress A/c Dr. $1,740,000
To revenues A/c $6,844,000
(To record the revenues)
Workings:
Revenues :
= (Cost incurred to date ÷ Expected costs to complete) × Contract value
= ($5,104,000 ÷ $8,800,000) × $11,800,000
= 0.58 × $11,800,000
= $6,844,000
