Question
In: Accounting
Required information In 2018, the Westgate Construction Company entered into a contract to construct a road...
Required information
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 | $ | 2,156,000 | $ | 3,388,000 | $ | 2,371,600 | |||
| Estimated costs to complete as of year-end | 5,544,000 | 2,156,000 | 0 | ||||||
| Billings during the year | 2,130,000 | 3,414,000 | 4,456,000 | ||||||
| Cash collections during the year | 1,865,000 | 3,300,000 | 4,835,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
2-a. In the journal below, complete the
necessary journal entries for the year 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).
Solutions
Expert Solution
Revenue recognized
2018 = costs incurred / total costs * contract price = 2156000/(2156000+5544000)*10000000 = 2800000
2019 = 3388000/(3388000+2156000)*(10000000 - 2800000) = 4400000
2020= 10000000-2800000 - 4400000 = 2800000
Part 2A
| Date | general journal | debit | credit |
| 2018 | construction in progress | 2156000 | |
| Various accounts | 2156000 | ||
| 2018 | accounts receivable | 2,130,000 | |
| Bills on construction contract | 2,130,000 | ||
| 2018 | cash | 1,865,000 | |
| Accounts receivable | 1,865,000 | ||
| 2018 | construction in progress | 644000 | |
| Cost of construction | 2156000 | ||
| Revenue from long-term contracts | 2800000 |
Part 2 B
| Date | general journal | debit | credit |
| 2019 | construction in progress | 3388000 | |
| Various accounts | 3388000 | ||
| 2019 | accounts receivable | 3,414,000 | |
| Bills on construction contract | 3,414,000 | ||
| 2019 | cash | 3300000 | |
| Accounts receivable | 3300000 | ||
| 2019 | construction in progress | 1012000 | |
| Cost of construction | 3388000 | ||
| Revenue from long-term contract | 4400000 |
Part 2 C
| Date | general journal | debit | credit |
| 2020 | construction in progress | 2371600 | |
| Various accounts | 2371600 | ||
| 2020 | Accounts receivable | 4,456,000 | |
| Bills on construction contract | 4,456,000 | ||
| 2020 | Cash | 4835000 | |
| Accounts receivable | 4835000 | ||
| 2020 | Construction in progress | 428400 | |
| Cost of construction | 2371600 | ||
| Revenue from long-term contract | 2800000 |
ekkarill92 answered 2 years agoRelated Solutions
Required information In 2018, the Westgate Construction Company entered into a contract to construct a road...
Required information
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
$
2,156,000
$
3,388,000
$
2,371,600
Estimated costs to complete as of year-end
5,544,000
2,156,000
0
Billings during the year
2,130,000
3,414,000
4,456,000
Cash collections during the year
1,865,000
3,300,000
4,835,000
Westgate recognizes revenue over time...
Required information In 2018, the Westgate Construction Company entered into a contract to construct a...
Required information
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
$
2,156,000
$
3,388,000
$
2,371,600
Estimated costs to complete as of year-end
5,544,000
2,156,000
0
Billings during the year
2,130,000
3,414,000
4,456,000
Cash collections during the year
1,865,000
3,300,000
4,835,000
Westgate recognizes revenue over...
Required information In 2018, the Westgate Construction Company entered into a contract to construct a...
Required information
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
$
2,156,000
$
3,388,000
$
2,371,600
Estimated costs to complete as of year-end
5,544,000
2,156,000
0
Billings during the year
2,130,000
3,414,000
4,456,000
Cash collections during the year
1,865,000
3,300,000
4,835,000
Westgate recognizes revenue over...
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...
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