Question
In 2024, 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 2024, 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 2026. Information related to the contract is as follows:
| 2024 | 2025 | 2026 | |
|---|---|---|---|
| Cost incurred during the year | $ 2,059,000 | $ 2,627,000 | $ 2,655,400 |
| Estimated costs to complete as of year-end | 5,041,000 | 2,414,000 | 0 |
| Billings during the year | 2,190,000 | 2,496,000 | 5,314,000 |
| Cash collections during the year | 1,895,000 | 2,400,000 | 5,705,000 |
Westgate recognizes revenue over time according to percentage of completion.
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.
Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.
| 2024 | 2025 | 2026 | |
|---|---|---|---|
| Costs incurred during the year | $ 2,059,000 | $ 3,895,000 | $ 4,185,000 |
| Estimated costs to complete as of year-end | 5,041,000 | 4,290,000 | 0 |
\begin{tabular}{|l|l|l|l|} \hline 2024 & 2025 & 2026 \\ \hline Revenue & & & \\ \hline Gross profit (loss) & & \\ \hline \end{tabular} Step by Step Solution
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A Textbook Of Accounting For Management
Authors: S.N. Maheshwari
3rd Edition
9325956195, 978-9325956193
