Sage, Inc. began work on a $7,099,000 contract in 2020 to construct an office building. Sage uses the completed-contract method. At December 31, 2020, the balances in certain accounts were Construction in Process $1,846,000, Accounts Receivable $262,000, and Billings on Construction in Process $900,000. Indicate how these accounts would be reported in Sage’s December 31, 2020, balance sheet.

The way recording this amount is shown in explanation

Explanation:

Billings on construction in the process will be deducted from the amount of construction in the process. Further records will be shown in the balance sheet as below

BALANCE SHEET

Current Assets

Account Receivables                                      $262,000

Inventories

Construction in process    $1,846,000

less: billings                         (900,000)

Cost in excess of billing                                     $946,000

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