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 | $ | 2,059,000 | $ | 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 percentage of
completion.
Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)
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).
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 | $ | 2,059,000 | $ | 3,895,000 | $ | 3,295,000 | |||
| Estimated costs to complete as of year-end | 5,041,000 | 3,195,000 | 0 | ||||||
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.)
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,059,000 | $ | 3,895,000 | $ | 4,185,000 | |||
| Estimated costs to complete as of year-end | 5,041,000 | 4,290,000 | 0 | ||||||
Solutions
ekkarill92 answered 1 year 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
$
2,580,000
$
4,042,000
$
2,175,800
Estimated costs to complete as of year-end
6,020,000
1,978,000
0
Billings during the year
2,060,000
4,562,000
3,378,000
Cash collections during the year
1,830,000
4,200,000
3,970,000
Westgate recognizes revenue over time according to...
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