Response to the following problem:
Lark Corporation uses the percentage-of-completion method of accounting for construction contracts. At the end of the current year, Lark estimates that its costs to complete a project exceed the contract price, so that an overall loss on the contract is anticipated.
What journal entry will Lark record at the end of the current year, given the following information?
• Revenue to date is $350,000 ($175,000 of which is to be recognized in the current year).
• The expense recognized previously was $100,000.
• An overall loss of $30,000 is anticipated.