Question

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 $ 2,072,000 $ 2,738,000 $ 2,849,000 Estimated costs to complete as of year-end 5,328,000 2,590,000 0 Billings during the year 2,160,000 2,650,000 5,190,000 Cash collections during the year 1,880,000 2,700,000 5,420,000 Westgate recognizes revenue over time according to percentage of completion. 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract. (Do not round intermediate calculations.)

Answer 1

Answer:

Balance Sheet (Partial)	2021	2022
Current Assets:
Accounts Receivable		280,000		230,000
Construction in progress	2,800,000		6,500,000
Less: Billings	2,160,000		4,810,000
Costs and profit in excess of billings		640,000		1,690,000
Current Liabilities:
Billing in excess of cost and profit

Workings:

	2021	2022
Cost incurred (cummulative)	2,072,000	4,810,000
Estimated costs to complete	5,328,000	2,590,000
Total Cost	7,400,000	7,400,000
Contract price	10,000,000	10,000,000
Profit	2,600,000	2,600,000
Percentage of completion	28%	65%
Profit to be recognized	728,000	962,000

Balance Sheet (Partial)	2021	2022
Current Assets:
Accounts Receivable	2,160,000-1,880,000	2,160,000-1,880,000+2,650,000-2,700,000
Construction in progress	2,072,000+728,000	2,738,000+962,000+(2,072,000+728,000)
Less: Billings	2,160,000	2,160,000+2,650,000

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