On January 1, 2016, a firm entered a five-year construction contract with a contract price...
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Accounting
On January 1, 2016, a firm entered a five-year construction contract with a contract price of $10,000,000. On December 31, 2016, the firm estimated the Gross Profit (Loss) for the contract to be $1,000,000 profit. On December 31, 2017, the firm estimated the Gross Profit (Loss) for the contract to be ($400,000) loss. Under the Completed Contract Method, the journal entry to record Gross Profit (Loss) should include:
a.
A debit to CIP of $1,000,000.
b.
No Entry.
c.
A credit to CIP of $1,400,000.
d.
A credit to CIP of $400,000.
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