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In: Accounting
Required information Problem 6-10 (Algo) Long-term contract; revenue recognition over time [LO6-8, 6-9] [The following information...
Required information
Problem 6-10 (Algo) Long-term contract; revenue recognition over time [LO6-8, 6-9]
[The following information applies to the questions
displayed below.]
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 | $ | 2,044,000 | $ | 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 percentage of
completion.
Problem 6-10 (Algo) 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.)
| 2021 | 2022 | 2023 | |||||||
| Costs incurred during the year | $ | 2,044,000 | $ | 3,885,000 | $ | 3,285,000 | |||
| Estimated costs to complete as of year-end | 5,256,000 | 3,185,000 | 0 | ||||||
Solve for "X"
| 2021 | 2022 | 2023 | |
| Revenue | $2,800,000 | X | X |
| Gross profit (loss) | $756,000 | X | X |
Please show you work, I've tried finding the answers to year 2022 and 2023 but nothing is working
Solutions
Expert Solution
· Requirement 4 asked
|
2021 |
2022 |
2023 |
|
|
Revenue |
$2,800,000 |
$3,705,376 |
$3,494,624 |
|
Gross Profit (Loss) |
$756,000 |
$130,000 |
($100,000) |
--Working
|
Working |
2021 |
2022 |
2023 |
|
|
A |
Contract Price |
$10,000,000 |
$10,000,000 |
$10,000,000 |
|
B |
Cost Incurred to Date |
$2,044,000 |
$5,929,000 |
$9,214,000 |
|
C |
Estimated cost yet to be incurred to complete the contract |
$5,256,000 |
$3,185,000 |
$0 |
|
D = B+C |
Total Cost |
$7,300,000 |
$9,114,000 |
$9,214,000 |
|
E = (B/D) x 100 |
% of Completion |
28.00% |
65.05% |
100.00% |
|
F = A x E |
Revenue to date |
$2,800,000 |
$6,505,376 |
$10,000,000 |
|
G |
Revenue of Previous year |
$0 |
$2,800,000 |
$6,505,376 |
|
H = F - G |
Net Revenue this year |
$2,800,000 |
$3,705,376 |
$3,494,624 |
|
I (=B) |
Cost to date |
$2,044,000 |
$5,929,000 |
$9,214,000 |
|
J |
Cost to date of previous year |
$0 |
$2,044,000 |
$5,929,000 |
|
K = I - J |
Net Cost for the year |
$2,044,000 |
$3,885,000 |
$3,285,000 |
|
L = A - D |
Estimated Gross Profit (Loss) |
$2,700,000 |
$886,000 |
$786,000 |
|
M |
Gross Profit (Loss) to be recognised |
$756,000 |
$130,000 |
($100,000) |
|
2800000 - 2044000 |
886000 - 756000 |
786000 - 886000 |
ekkarill92 answered 1 year agoRelated Solutions
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