Question
In: Accounting
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
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.
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. (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.)
| 2021 | 2022 | 2023 | |||||||
| Costs incurred during the year | $ | 2,610,000 | $ | 3,850,000 | $ | 4,050,000 | |||
| Estimated costs to complete as of year-end | 6,390,000 | 4,200,000 | 0 | ||||||
Solutions
Expert Solution
| 2021 | 2022 | 2023 | |
| Revenue | $ 2,900,000 | $ 3,160,038 | $ 3,939,962 |
| Gross profit | $ 290,000 | $ (689,962) | $ (110,038) |
Working
| 2021 | 2022 | 2023 | ||
| A | Contract Price | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 |
| B | Cost Incurred to Date | $ 2,610,000 | $ 6,460,000 | $ 10,510,000 |
| C | Estimated cost yet to be incurred to complete the contract | $ 6,390,000 | $ 4,200,000 | $ 0 |
| D = B+C | Total Cost | $ 9,000,000 | $ 10,660,000 | $ 10,510,000 |
| E = (D/B) x 100 | % of Completion | 29% | 61% | 100% |
| F = A x E | Revenue to date | $ 2,900,000 | $ 6,060,038 | $ 10,000,000 |
| G | Revenue of Previous year | $ 0 | $ 2,900,000 | $ 6,060,038 |
| H = F - G | Net Revenue this year | $ 2,900,000 | $ 3,160,038 | $ 3,939,962 |
| I | Cost to date | $ 2,610,000 | $ 6,460,000 | $ 10,510,000 |
| J | Cost to date of previous year | $ 0 | $ 2,610,000 | $ 6,460,000 |
| K = I - J | Net Cost for the year | $ 2,610,000 | $ 3,850,000 | $ 4,050,000 |
| L = H - K | Gross Profits | $ 290,000 | -$ 689,962 | -$ 110,038 |
ekkarill92 answered 2 years agoRelated Solutions
Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.
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...
Problem 5-10 Part 4 4. Calculate the amount of revenue and gross profit (loss) to be...
Problem 5-10 Part 4 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. (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.)
2018
2019
2020
Cost incurred during the
year
$
2,184,000
$
3,860,000
$
3,260,000
Estimated costs to complete as
of year-end
5,616,000...
For each of the following independent transactions, calculate the recognized gain or loss to the seller...
For each of the following independent transactions, calculate
the recognized gain or loss to the seller and the adjusted basis to
the buyer.
If an amount is zero, enter "0."
Seller's Recognized
Gain/Loss
Buyer's Adjusted Basis
a.
Bonnie sells Parchment, Inc. stock (adjusted basis $17,000) to
Phillip, her brother, for its fair market value of $12,000.
$
$
b.
Amos sells land (adjusted basis $85,000) to his nephew, Boyd,
for its fair market value of $70,000.
$
$
c.
Susan...
Profit and Loss Statement 2018 Revenue 34,290 percent of growth 0.0% Gross Profit 34,290 Gross Margin...
Profit and Loss Statement 2018
Revenue
34,290
percent of growth
0.0%
Gross Profit
34,290
Gross Margin
100%
SGA Costs
(2,500)
EBITDA
31,790
EBITDA Margin
92.7%
Depreciation
(7,500)
% of Sales
-21.9%
EBIT
24,290
EBIT Margin
70.8%
Interest
(2,500)
% of Sales
-7.3%
EBIT
21,790
EBIT Margin
63.5%
Net Income
21,790
Net Income Margin
63.5%
Balance Sheet 2017
2018
Cash 9,000
12,000
Inventory 0
0
A/R 0
3,179
Current Assets 9,000
15,179
Fixed Assets 747,300
763,800
Total Assets ...
When revenues, costs and gross profit are recognized at the completion of the contract rather than...
When revenues, costs and gross profit are recognized at the
completion of the contract rather than periodically throughout the
contract:
a) Costs are higher and gross profit is lower
b) Either method results in the same revenues, costs and gross
profits being recognized by the end of the project.
c) Revenues are higher and gross profit is lower
d) Revenues and gross profit are higher
What is the relationship between Construction-in-progress (CIP)
and the Billings on Construction Contract account?
a)...
For each of the following items, calculate the amount of revenue or expense that should be...
For each of the following items, calculate the amount of revenue
or expense that should be recognized on the income statement for
Pelkey Co. for the year ended December 31, 2016:
Required:
a. Cash collected from customers during the
year amounted to $878,000, and accounts receivable increased by
$46,300. How much were sales on account for the year ended December
31, 2016?.
b. Cash payments for income taxes during the
year were $189,000, and income taxes payable increased by $39,500....
Please format answer into a table Calculate gross sales, variable costs, and gross margin (profit) for...
Please format answer into a table
Calculate gross sales, variable costs, and gross margin
(profit) for each product and for an entire company.
Calculate break-even sales dollars for a company.
Determine the relevant cash flows for a planned asset purchase.
Madison Company produces four lines of accessories for major
U.S. combine manufacturers. The lines are known by the code letters
A, B, C, and D. The current sales mix for Madison Company and the
contribution margin ratio for these product...
Required information Problem 6-2B Calculate ending inventory, cost of goods sold, sales revenue, and gross profit...
Required information
Problem 6-2B Calculate ending inventory, cost of goods sold,
sales revenue, and gross profit for four inventory methods (LO6-3,
6-4, 6-5)
[The following information applies to the questions
displayed below.]
Pete’s Tennis Shop has the following transactions related to its
top-selling Wilson tennis racket for the month of August.
Pete’s Tennis Shop uses a periodic inventory system.
Date
Transactions
Units
Unit Cost
Total Cost
August
1
Beginning inventory
8
$
156
$
1,248
August
4
Sale ($205 each)...
Required information Problem 6-2B Calculate ending inventory, cost of goods sold, sales revenue, and gross profit...
Required information
Problem 6-2B Calculate ending inventory, cost of goods sold,
sales revenue, and gross profit for four inventory methods (LO6-3,
6-4, 6-5)
[The following information applies to the questions
displayed below.]
Pete’s Tennis Shop has the following transactions related to its
top-selling Wilson tennis racket for the month of August.
Pete’s Tennis Shop uses a periodic inventory system.
Date
Transactions
Units
Unit Cost
Total Cost
August
1
Beginning inventory
8
$
152
$
1,216
August
4
Sale ($185 each)...
Use the following information: Gross profit ₤3,900,000 Loss on sale of investments 10,000 Interest expense 7,500...
Use the following information:
Gross profit
₤3,900,000
Loss on sale of investments
10,000
Interest expense
7,500
Gain on sale of discontinued
operations
30,000
Income tax rate
20%
Compute the total amount of income tax expense experienced by the
company.
₤782,500
₤800,000
₤1,005,000
₤765,000
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