Question
In: Accounting
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
Westgate recognizes revenue over time according to percentage
of completion.
3. Complete the information required below to prepare a
partial balance sheet for 2018 and 2019 showing any items related
to the contract. (Do not round intermediate calculations.)
Solutions
Expert Solution
| Balance Sheet (Partial) | 2018 | 2019 | |||
| Current Assets: | |||||
| Accounts receivable | $ 2,00,000 | $ 6,00,000 | |||
| Construction in progress | $ 30,00,000 | $ 75,00,000 | |||
| Less: Billings | $ -20,00,000 | $ -60,00,000 | |||
| Cost in excess of billings | $ 10,00,000 | $ 15,00,000 | |||
| Current Liabilities: | |||||
| Working Notes: | 2018 | 2019 | |||
| Cost incurred during the year | $ 24,00,000 | $ 36,00,000 | |||
| Add: | Cost incurred in previous year | $ 24,00,000 | |||
| Cost incurred till date (i) | $ 24,00,000 | $ 60,00,000 | |||
| Add: | Estimated cost to complete | $ 56,00,000 | $ 20,00,000 | ||
| Total cost (ii) | $ 80,00,000 | $ 80,00,000 | |||
| Percentage Completed [(iii) = (i) / (ii)] | 30% | 75% | |||
| Construction in progress [$10000000 X (iii)] | $ 30,00,000 | $ 75,00,000 | |||
| Billings during the year | $ 20,00,000 | $ 40,00,000 | |||
| Less: | Cash collections during the year | $ 18,00,000 | $ 36,00,000 | ||
| Accounts Receivable | $ 2,00,000 | $ 4,00,000 | |||
| Add: | Previous year balance | $ 2,00,000 | |||
| Total Accounts receivables | $ 2,00,000 | $ 6,00,000 | |||
ekkarill92 answered 11 months agoRelated Solutions
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,604,000
$
4,032,000
$
1,940,400
Estimated costs to complete as
of year-end
5,796,000
1,764,000
0
Billings during the year
2,040,000
4,596,000
3,364,000
Cash collections during the
year
1,820,000
4,000,000
4,180,000
Westgate recognizes revenue over time according to...
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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 Westgate Construction uses the
completed contract method...
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
Westgate Construction uses the completed contract method...
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,604,000
$
4,032,000
$
1,940,400
Estimated costs to complete as
of year-end
5,796,000
1,764,000
0
Billings during the year
2,040,000
4,596,000
3,364,000
Cash collections during the
year
1,820,000
4,000,000
4,180,000
Westgate recognizes revenue over time according to...
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$2,624,000 $3,690,000 $2,074,600
Estimated costs to complete as of year-end
5,576,000 1,886,000 0
Billings during the year
2,200,000 4,114,000 3,686,000
Cash collections during the year
2,000,000 3,800,000 4,200,000
Westgate Construction uses the completed contract method of
accounting for long-term construction contracts.
Required:
1. Calculate the...
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,610,000
$
3,162,000
$
2,230,800
Estimated costs to complete as
of year-end
6,390,000
2,028,000
0
Billings during the year
2,100,000
3,672,000
4,228,000
Cash collections during the
year
1,850,000
3,000,000
5,150,000
Westgate recognizes revenue over time according to...
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,610,000
$
3,162,000
$
2,230,800
Estimated costs to complete as
of year-end
6,390,000
2,028,000
0
Billings during the year
2,100,000
3,672,000
4,228,000
Cash collections during the
year
1,850,000
3,000,000
5,150,000
Westgate recognizes revenue over time according to...
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,640,000
$
2,300,000
$
2,926,000
Estimated costs to complete as
of year-end
6,160,000
2,660,000
0
Billings during the year
2,080,000
2,860,000
5,060,000
Cash collections during the
year
1,840,000
2,800,000
5,360,000
Westgate recognizes revenue over time according to...
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,100,000
$
3,150,000
$
2,475,000
Estimated costs
to complete as of year-end
5,400,000
2,250,000
0
Billings during
the year
2,150,000
3,100,000
4,750,000
Cash collections
during the year
1,875,000
3,100,000
5,025,000
Westgate recognizes revenue over time according to...
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,059,000
$
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...
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