POC-20230220

	A	B	C	D	E	F	G	H	I	J	K	L
3		INSTRUCTIONS: enter your data in the yellow-shaded cells below. Then, click Recalculate at the top of the screen.
5		Year					2025		2026
6		Contract price (fixed)
7		Costs incurred during the year
8		Estimated cost (at year-end) to complete the entire contract
9		Progress billings during the year
10		Cash collected during the year
11
12		Contract price (fixed)		A							Totals
13		Costs:
14		Opening balance of costs (costs incurred in previous periods)			0
15		Costs incurred during the year
16		Costs incurred to date (from beginning of contract to end of this year)		B
17		Estimated cost (at year-end) to complete the entire contract							0
18		Total estimated costs (at year-end) of the entire contract		C
19
20		Estimated gross profit of the entire contract		A - C
21		Percentage complete		B/C
22
23		Revenue earned to date (from beginning of contract to end of the year)		A x B/C
24		Less revenue recognized in prior years			0
25		Revenue to be recognized in the year
26
27
28									= $15,000 [=$339,000 actual profit generated on the entire contract less $324,000 profit recognized in 2024/25.]
29
30		By the end of 2025 the estimated $324,000 total gross profit generated between 01/January/2024 and 31/December/2025 exceeds the $125,000 gross profit that was recognized in 2024. Thus, the gross profit that should be recognized in 2025 is $199,000 [= $324,000 less $125,000].
31
32		Construction costs to be expensed for the year
33
34			JOURNAL ENTRIES to RECORD (i) COSTS INCURRED and (ii) REVENUE AND EXPENSE RECOGNIZED
35			Red-coloured account names: indicates an Income Statement account.
36					Dr		Cr
37			Contract Asset/Liability [Construction in Process* (CIP)]
38			Cash/payables etc
39
40			Construction expenses
41
42			Revenue from long-term contracts
43			* Some textbooks use 'Construction in Process (CIP)' in place of 'Contract Asset/Liability' for this journal entry.
44					Dr		Cr
45			Contract Asset/Liability [Construction in Process* (CIP)]
46			Cash/payables etc
47
48			Construction expenses
49
50			Revenue from long-term contracts
51			* Some textbooks use 'Construction in Process (CIP)' in place of 'Contract Asset/Liability' for this journal entry.
52					Dr		Cr
53			Contract Asset/Liability [Construction in Process* (CIP)]
54			Cash/payables etc
55
56			Construction expenses
57
58			Revenue from long-term contracts
59			* Some textbooks use 'Construction in Process (CIP)' in place of 'Contract Asset/Liability' for this journal entry.
60			© Brian Conheady		For educational purposes.
61
62			JOURNAL ENTRIES to RECORD (i) BILLINGS and (ii) COLLECTIONS
63
64			Accounts receivable
65			Contract Asset/Liability [CIP, or Billings on CIP*]
66
67			Cash
68			Accounts receivable
69			* Some textbooks use 'Construction in Process (CIP)', or 'Billings on CIP', in place of 'Contract Asset/Liability' for this journal entry.
70
71			Accounts receivable
72			Contract Asset/Liability [CIP, or Billings on CIP*]
73
74			Cash
75			Accounts receivable
76			* Some textbooks use 'Construction in Process (CIP)', or 'Billings on CIP', in place of 'Contract Asset/Liability' for this journal entry.
77
78			Accounts receivable
79			Contract Asset/Liability [CIP, or Billings on CIP*]
80
81			Cash
82			Accounts receivable
83			* Some textbooks use 'Construction in Process (CIP)', or 'Billings on CIP', in place of 'Contract Asset/Liability' for this journal entry.
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87			© Brian Conheady		For educational purposes.
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