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Accounting for Contract using Percentage of Completion Method

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Chicago contractors got  $5,400,000 contract to construct a school building for the City of Chicago. Work on this contract began in 2013 and the financial data pertaining to this contract is available here.

Cost incurred till Dec.31, 2013                      $1,080,000
Billings made to City                                      $1,000,000
Amount collected from City                            $  750,000

The estimated future cost to complete this contract is $3,240,000.
(a) Prepare Chicago contractors 2013 journal entries using percentage of completion method.

(b) Show how the contract accounts will appear in the Balance Sheet of Chicago Contractors on 12/31/2013.

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You will find attached a dynamic Excel file showing the given data as well as ...

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A dynamic Excel file is used to show the given data as well as the suggested solution.
Detailed computation of the percentage of completion amounts is shown prior to the journal entries. An excerpt of the balance sheet is also prepared to show how the contract accounts will appear in the Balance Sheet.