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 | $ | 1,400,000 | $ | 3,150,000 | $ | 2,695,000 | |||||
| Estimated costs to complete as of year-end | 5,600,000 | 2,450,000 | 0 | ||||||||
| Billings during the year | 1,000,000 | 3,550,000 | 5,450,000 | ||||||||
| Cash collections during the year | 800,000 | 2,600,000 | 6,600,000 | ||||||||
Assume that Westgate Constructions contract with Santa Clara County does not qualify for revenue recognition over time. 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 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 | $ | 2,600,000 | $ | 3,900,000 | $ | 3,300,000 | |||||
| Estimated costs to complete as of year-end | 5,800,000 | 3,300,000 | 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 | $ | 2,600,000 | $ | 3,900,000 | $ | 4,200,000 | |||||
| Estimated costs to complete as of year-end | 5,800,000 | 4,300,000 | 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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No Date General Journal Debit Credit 1 2021 No Transaction Recorded 2 2021 Cashselected answer incorrect 1,000,000selected answer correct not attempted Deferred revenueselected answer incorrect not attempted 1,000,000selected answer correct 3 2021 Cashselected answer correct 800,000selected answer correct not attempted Accounts receivableselected answer correct not attempted 800,000selected answer correct 4 2021 Cost of constructionselected answer incorrect 14,000,000selected answer incorrect not attempted Various accountsselected answer incorrect not attempted 14,000,000selected answer incorrect -
No Date General Journal Debit Credit 2 2022 Cashselected answer incorrect 3,550,000selected answer correct not attempted Service revenueselected answer incorrect not attempted 3,550,000selected answer correct 3 2022 Cashselected answer correct 2,660,000selected answer incorrect not attempted Accounts receivableselected answer correct not attempted 2,660,000selected answer incorrect 4 2022 Cost of constructionselected answer incorrect 3,150,000selected answer incorrect not attempted Accounts payableselected answer incorrect not attempted 3,150,000selected answer incorrect -
No Date General Journal Debit Credit 2 2023 Billings on construction contractselected answer incorrect 5,450,000selected answer correct not attempted Cashselected answer incorrect not attempted 5,450,000selected answer correct 3 2023 Cashselected answer correct 6,600,000selected answer correct not attempted Accounts receivableselected answer correct not attempted 6,600,000selected answer correct 4 2023 Cost of constructionselected answer correct 2,695,000selected answer incorrect not attempted Notes payableselected answer incorrect not attempted 2,695,000selected answer incorrect -
Complete this question by entering your answers in the tabs below.
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Balance Sheet (Partial) 2021 2022 Current assets: not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted $0 $0 Current liabilities: not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted -
2021 2022 2023 Revenue $180,000selected answer incorrect $6,150,000selected answer incorrect $12,050,000selected answer incorrect Gross profit (loss) $(800,000)selected answer incorrect $2,250,000selected answer incorrect $8,750,000selected answer incorrect
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Capital Market Instruments Analysis And Valuation
Authors: M. Choudhry, D. Joannas, G. Landuyt, R. Pereira, R. Pienaar
3rd Edition
0230576036, 9780230576032
