[Anonymous]

Here are the facts for a example I’m have trouble with for % of completion

Contract Price: $500,000

cost incurred this year: 135,000

Est. cost to complete: 315,000

Progress billings: 200,000

collections: 175,000

FYI- These are year 1 entries

If the entry for cost is:

Dr. Construction in Progress 135,000

Cr. Cash 135,000

then why is the entry to recognize profit:

Dr. Construction expense 135,000

Dr. Construction in Progress 15,000

Cr. Construction Revenue 150,000

Should the entry to recognize profit be:

Dr. Construction in Progress 15,000

Cr. Construction Revenue 15,000

Because it seems like the 135,000 cost is being accounted for twice. If it’s already in the Construction in Progress account for the first entry, then why would in be included in Construction expense account in the second entry? Because I thought all profit and cost/expense was recorded to the Construction in Progress account.