Question
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
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 | $ | 2,550,000 | $ | 4,250,000 | $ | 1,870,000 | |||
| Estimated costs to complete as of year-end | 5,950,000 | 1,700,000 | 0 | ||||||
| Billings during the year | 2,050,000 | 4,750,000 | 3,200,000 | ||||||
| Cash collections during the year | 1,825,000 | 4,100,000 | 4,075,000 | ||||||
Westgate recognizes revenue over time according to percentage of completion.
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.
2021 2022 2023
Revenue ______ _______ ________
Gross P _______ _______ ________
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 | |||||||
| Costs incurred during the year | $ | 2,550,000 | $ | 3,825,000 | $ | 3,225,000 | |||
| Estimated costs to complete as of year-end | 5,950,000 | 3,125,000 | 0 | ||||||
2021 2022 2023
Revenue ______ _______ ________
Gross P _______ _______ ________
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 | |||||||
| Costs incurred during the year | $ | 2,550,000 | $ | 3,825,000 | $ | 3,975,000 | |||
| Estimated costs to complete as of year-end | 5,950,000 | 4,150,000 | 0 | ||||||
2021 2022 2023
Revenue ______ _______ ________
Gross P _______ _______ ________
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Audits
Authors: Arthur E Cutforth
1st Edition
1017097445, 978-1017097443
