Problem 5-11 Long-term contract; revenue recognition upon completion [LO5-9] In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa
Problem 5-11 Long-term contract; revenue recognition upon completion [LO5-9]
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 | $ | 2,400,000 | | $ | 3,600,000 | | $ | 2,200,000 | |
| Estimated costs to complete as of year-end | | 5,600,000 | | | 2,000,000 | | | 0 | |
| Billings during the year | | 2,000,000 | | | 4,000,000 | | | 4,000,000 | |
| Cash collections during the year | | 1,800,000 | | | 3,600,000 | | | 4,600,000 | |
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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 | $ | 2,400,000 | | $ | 3,800,000 | | $ | 3,200,000 | |
| Estimated costs to complete as of year-end | | 5,600,000 | | | 3,100,000 | | | 0 | |
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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 | $ | 2,400,000 | | $ | 3,800,000 | | $ | 3,900,000 | |
| Estimated costs to complete as of year-end | | 5,600,000 | | | 4,100,000 | | | 0 | |
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Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2c Req3 Req 4 Req 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. (Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign.) 2018 2019 2020 Revenue 3.000.000 Gross profit (loss) $ 00 300,000) $200,000 Complete this question by entering your answers in the tabs below. Req 1 Req 2A Reg 2B Req 2c Req3 Req 4 Reg 5 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.) No Date General Journal Debit Credit 2019 2,400,000 Construction in progress Various accounts 2,400,000 2019 2,000,000 Accounts receivable Billings on construction contract 2,000,000 2019 Cash 1,800,000 Accounts receivable 1,800,000 2019 Cost of construction 2,400,000 Revenue from long-term contracts 2,400,000 *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 20 Reg 3 Req 4 Req 5 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.) 2018 2019 2020 Revenue Gross profit (loss) 3,000,000 7,500,000 10,000,000 $ 0 $ 0 $ 180,000 C Reg 1 Req 2A > Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Req 2C Req3 Req 4 Req 5 In the journal below, complete the necessary journal entries for the year 2020 (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.) No General Journal Debit Credit Date 2019 2,200,000 Construction in progress Various accounts 2,200,000 2019 4,000,000 Accounts receivable Billings on construction contract 4,000,000 2019 Cash 4,600,000 Accounts receivable 4,600,000 2019 Construction in progress Cost of construction Revenue from long-term contracts 1,800,000 2,200,000 X 4,000,000 Complete this question by entering your answers in the tabs below. Req 1 Req 2A Reg 2B Req 2c Req3 Req 4 Req 5 In the journal below, complete the necessary journal entries for the year 2019 (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.) No General Journal Debit Credit Date 2019 1 3,600,000 Construction in progress Various accounts 3,600,000 2019 4,000,000 Accounts receivable Billings on construction contract 4,000,000 2019 3,600,000 Cash Accounts receivable 3,600,000 2019 3,600,000 Cost of construction Revenue from long-term contracts 3,600,000 *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 20 Req3 Req 4 Req 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. (Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign.) 2018 2019 2020 Revenue Gross profit (loss) 3,000,000 $ 0 3,666,667 $ 0 3,333,333 $ 600,000
