Recording Long-Term Construction: Recognize Revenue at a Point in Time and Over TimeWatson Construction Company contracted to build a plant for $500,000. Construction started in January 2020 and was completed in November 2021. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. 20202021Costs incurred during year$290,000$120,000Estimated additional costs to complete125,0000Billings during year270,000230,000Cash collections during year250,000250,000Revenue Recognized at a Point in TimeRevenue Recognized Over Timea. Provide the 2020 and 2021 journal entries for Watson assuming revenue is recognized at a point in time. Provide entries for (1) construction costs incurred, (2) progress billings, (3) cash collections, and (4) revenues and expenses.Note: If a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). DateAccount NameDr.Cr.2020 (1)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer Cash, Payables, etc.AnswerAnswer2020 (2)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2020 (3)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2020 (4)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record revenue from contract. AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record cost of contract. 2021 (1)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer Cash, Payables, etc.AnswerAnswer2021 (2)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2021 (3)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2021 (4)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record revenue from contract. AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record cost of contract.

Question

Recording Long-Term Construction: Recognize Revenue at a Point in Time and Over TimeWatson Construction Company contracted to build a plant for $500,000. Construction started in January 2020 and was completed in November 2021. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. 20202021Costs incurred during year$290,000$120,000Estimated additional costs to complete125,0000Billings during year270,000230,000Cash collections during year250,000250,000Revenue Recognized at a Point in TimeRevenue Recognized Over Timea. Provide the 2020 and 2021 journal entries for Watson assuming revenue is recognized at a point in time. Provide entries for (1) construction costs incurred, (2) progress billings, (3) cash collections, and (4) revenues and expenses.Note: If a journal entry isn't required for the transaction, select &#34;N/A&#34; as the account  names and leave the Dr. and Cr. answers blank (zero). DateAccount NameDr.Cr.2020 (1)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer Cash, Payables, etc.AnswerAnswer2020 (2)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2020 (3)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2020 (4)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record revenue from contract.   AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record cost of contract.  2021 (1)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer Cash, Payables, etc.AnswerAnswer2021 (2)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2021 (3)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer2021 (4)AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record revenue from contract.   AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/AAnswerAnswer To record cost of contract.

Accepted Answer

Given information is:
Watson Construction Company contracted to build a plant for $500,000.…

	2020	2021
Costs incurred during year	$290,000	$120,000
Estimated additional costs to complete	125,000	0
Billings during year	270,000	230,000
Cash collections during year	250,000	250,000

Date	Account Name	Dr.	Cr.
2020 (1)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	Cash, Payables, etc.	Answer	Answer
2020 (2)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2020 (3)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2020 (4)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record revenue from contract.
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record cost of contract.
2021 (1)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	Cash, Payables, etc.	Answer	Answer
2021 (2)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2021 (3)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
2021 (4)	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record revenue from contract.
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	AnswerCashAccounts ReceivableAccounts PayableRetained EarningsConstruction in ProcessBillings on ContractsRevenue from Long-Term ContractsCost of ConstructionLoss from Long-Term ContractsN/A	Answer	Answer
	To record cost of contract.

Provide the 2020 and 2021 journal entries for Watson assuming revenue is recognized at a point in time. Provide entries for (1) construction costs incurred, (2) progress billings, (3) cash collections, and (4) revenues and expenses. Note: If a journal entry isn't