Question
In 2018, 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
In 2018, 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 2020. Information related to the contract is as follows:
| 2018 | 2019 | 2020 | |||||||||
| Cost incurred during the year | $ | 2,291,000 | $ | 3,555,000 | $ | 2,259,400 | |||||
| Estimated costs to complete as of year-end | 5,609,000 | 2,054,000 | 0 | ||||||||
| Billings during the year | 1,900,000 | 3,946,000 | 4,154,000 | ||||||||
| Cash collections during the year | 1,700,000 | 3,500,000 | 4,800,000 | ||||||||
Westgate Construction uses the completed contract method of accounting for long-term construction contracts. Required:
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 2018 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred). 3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 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.
| 2018 | 2019 | 2020 | |||||||||
| Cost incurred during the year | $ | 2,510,000 | $ | 3,855,000 | $ | 3,210,000 | |||||
| Estimated costs to complete as of year-end | 5,710,000 | 3,210,000 | 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.
| 2018 | 2019 | 2020 | ||||||||||||
| Cost incurred during the year | $ | 2,510,000 | $ | 3,855,000 | $ | 4,065,000 | ||||||||
| Estimated costs to complete as of year-end | 5,710,000 | 4,210,000 | 0 | |||||||||||
| Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign.) | ||||||||||||||
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In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the construction costs.
Record the progress billings.
Record the cash collections.
Record the gross profit (loss).
| I need those same entries for all three years Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract.
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. (Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign.)
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Gleim CIA Review Part 2 Practice Of Internal Auditing
Authors: Irvin N. Gleim
2020 Edition
1618542648, 978-1618542649
