Question
In: Accounting
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000.
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 | $ | 2,610,000 | $ | 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 percentage of completion.
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).
Solutions
Expert Solution
ANSWER :
2-a
| Date | General journal | Debit | Credit |
| 2021 | Construction in progress | $ 2610000 | |
| Various account | $ 2610000 | ||
| ( To record cost incurred ) | |||
| 2021 | Account receivable | $ 2100000 | |
| Billing on construction | $ 2100000 | ||
| ( To record billing during the year ) | |||
| 2021 | Cash | $ 1850000 | |
| Account receivable | $ 1850000 | ||
| ( To record cash collected from customer ) | |||
| 2021 | Construction in progress | $ 290000 | |
| Cost of construction | $ 2610000 | ||
| Construction Revenue | $ 2900000 | ||
| ( To record recognize revenue ) |
2-b
| Date | General journal | Debit | Credit |
| 2022 | Construction in progress | $3162000 | |
| Various account | $ 3162000 | ||
| ( To record cost incurred ) | |||
| 2022 | Account receivable | $ 3,672,000 | |
| Billing on construction | $ 3,672,000 | ||
| ( To record billing during the year ) | |||
| 2022 | Cash | $ 3000000 | |
| Account receivable | $ 3000000 | ||
| ( To record cash collected from customer ) | |||
| 2022 | Construction in progress | $ 1338000 | |
| Cost of construction | $ 3162000 | ||
| Construction Revenue | $ 4500000 | ||
| ( To record recognize revenue ) |
2-c
| Date | General journal | Debit | Credit |
| 2023 | Construction in progress | $ 2230800 | |
| Various account | $ 2230800 | ||
| ( To record cost incurred ) | |||
| 2023 | Account receivable | $ 4228000 | |
| Billing on construction | $ 4228000 | ||
| ( To record billing during the year ) | |||
| 2023 | Cash | $ 5150000 | |
| Account receivable | $ 5150000 | ||
| ( To record cash collected from customer ) | |||
| 2023 | Construction in progress | $ 369200 | |
| Cost of construction | $ 2230800 | ||
| Construction Revenue | $ 2600000 | ||
| ( To record recognize revenue ) | |||
| 2023 | Billing on construction contract | $ 10000000 | |
| Construction in progress | $ 10000000 | ||
| ( To record completion of contract ) |
Working note -1
Computation of revenue recognised each year
| 2021 | 2022 | 2023 | |
| Cost incurred during the year | $ 2610000 | $ 3162000 | $ 2230800 |
| Cumulative cost for the year | $ 2610000 | $ 5772000 | $ 8002800 |
| Add - Estimated cost to complete | $ 6390000 | $ 2028000 | $ 0 |
| Total estimated cost | $ 9000000 | $ 7800000 | $ 8002800 |
| Completion % (Cumulative cost *100/ Total estimated cost ) | 29 % | 74 % | 100 % |
| Revenue recognised till date (10000000) * Completion % | $ 2900000 | $ 7400000 | $ 10000000 |
| Revenue already recognised | $ 0 | $ 2900000 | $ 7400000 |
| Revenue recognised in current year | $ 2900000 | $ 4500000 | $ 2600000 |
| less - Cost incurred during the year | $ 2610000 | $ 3162000 | $ 2230800 |
| Gross profit | $ 290000 | $ 1338000 | $ 369200 |
ekkarill92 answered 2 years agoRelated Solutions
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000.
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:
Westgate recognizes revenue over time according to percentage of completion.
Required:
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In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000.
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2021
2022
2023
Cost incurred during the year
$
2,100,000
$
2,450,000
$
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4,900,000
2,450,000
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2,350,000
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In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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$
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3,624,000
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Assume that Westgate Construction’s contract with Santa...
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
In 2021, the Westgate Construction Company entered into a
contract to construct a road for Santa Clara County for
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the contract is as follows:
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2022
2023
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$
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
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In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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:
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2022
2023
Cost incurred during the year
$
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$
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$
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5,429,000
1,424,000
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Billings during the year
2,900,000
4,576,000
2,524,000
Cash collections during the year
2,700,000
4,500,000
2,800,000
Assume that Westgate Construction’s contract with Santa...
In 2021, the Westgate Construction company entered into a contract to construct a road for Santa...
In 2021, the Westgate Construction company entered into
a contract to construct a road for Santa Clara County for
$10,000,000. The road was completed in 2023. Information related to
the contract is as follows.
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2019
2020
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$
2,628,000
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In 2021, the Westgate Construction company entered into a contract to construct a road for Santa...
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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.
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2,044,000
$
2,628,000
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2,890,800
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5,256,000
2,628,000
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2,170,000
2,502,000
5,328,000
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1,885,000
2,600,000
5,515,000
3. Complete the information required below to...
in 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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 2020. Information related to
the contract is as follows: 2018 2019 2020 Cost incurred during the
year $ 2,044,000 $ 2,628,000 $ 2,890,800 Estimated costs to
complete as of year-end 5,256,000 2,628,000 0 Billings during the
year 2,170,000 2,502,000 5,328,000 Cash collections during the year
1,885,000 2,600,000 5,515,000 Westgate recognizes revenue over time
according to...
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,400,000
$
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
Assume that Westgate Construction’s contract with Santa...
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2022
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$
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Cash collections during the year
1,815,000
3,900,000
4,285,000
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