In: Accounting
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 | ||||||