EVERYTHING IS CORRECT WITH THE EXCEPTION OF 3 AND 5

In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows:

	2021				2022				2023
Cost incurred during the year	$	2,624,000			$	3,690,000			$	2,074,600
Estimated costs to complete as of year-end		5,576,000				1,886,000				0
Billings during the year		2,200,000				4,114,000				3,686,000
Cash collections during the year		2,000,000				3,800,000				4,200,000

Assume that Westgate Constructions contract with Santa Clara County does not qualify for revenue recognition over time.

1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.

2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs incurred).

3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract.

4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information.

	2021				2022				2023
Cost incurred during the year	$	2,420,000			$	3,810,000			$	3,220,000
Estimated costs to complete as of year-end		5,620,000				3,120,000				0

5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information.

	2021				2022				2023
Cost incurred during the year	$	2,420,000			$	3,810,000			$	3,930,000
Estimated costs to complete as of year-end		5,620,000				4,120,000				0

2022 Revenue Gross profit (loss) 2021 $ $ 0 0 $ $ 0 0 $ $ 2023 10,000,000 1,611,400 Credit No 1 Date 2021 General Journal Construction in progress Various accounts Debit 2,624,000 2,624,000 2021 2,200,000 Accounts receivable Billings on construction contract 2,200,000 2021 2,000,000 Cash Accounts receivable 2,000,000 2021 No journal entry required Credit No 1 Date 2022 General Journal Construction in progress Various accounts Debit 3,690,000 3,690,000 - 2 2022 4,114,000 Accounts receivable Billings on construction contract 4,114,000 2022 3,800,000 Cash Accounts receivable 3,800,000 2022 No journal entry required Credit No 1 Date 2023 General Journal Construction in progress Various accounts Debit 2,074,600 2,074,600 2023 3,686,000 Accounts receivable Billings on construction contract 3,686,000 Cash 4,200,000 Accounts receivable 4,200,000 2023 Cost of construction Construction in progress Revenue from long-term contracts 8,388,600 1,611,400 10,000,000 2021 2022 $ 200,000 $ 514,000 Balance Sheet (Partial) Current assets: Accounts receivable Construction in progress Less: Billings Costs in excess of billings Current liabilities: $ $ 5,576,000 X 2,200,000 1,886,000 X 6,314,000 $3,376,000 (4.428,000) 2022 Revenue Gross profit (loss) 2021 $ $ 0 0 $ $ 0 0 $ $ 2023 10,000,000 550,000 2021 2022 $ Revenue Gross profit (loss) $ % $ % 0 0 2023 10,000,000 (160,000) 0