Question

Required information [The following information applies to the questions displayed below.] 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 $ 2,490,000 $ 3,984,000 $ 2,008,600 Estimated costs to complete as of year-end 5,810,000 1,826,000 0 Billings during the year 2,030,000 4,444,000 3,526,000 Cash collections during the year 1,815,000 3,900,000 4,285,000 Westgate recognizes revenue over time according to percentage of completion. rev: 09_15_2017_QC_CS-99734 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 $ 2,490,000 $ 3,815,000 $ 3,945,000 Estimated costs to complete as of year-end 5,810,000 4,130,000 0 rev: 09_15_2017_QC_CS-99734 Next Visit question mapQuestion 5 of 8 Total 5 of 8 Prev

Answer 1

1.

	Percentage completion method	2018	2019	2020
	Cost incurred in till previous year	0	2490000	6474000
ADD	Cost incurred during the year	2490000	3984000	2008600
	Total cost incurred till date	2490000	6474000	8482600
ADD	Estimated cost to be incurred	5810000	1826000	0
	Total estimated cost to be incurred	8300000	8300000	8482600
	Percentage of completion (A)	30%	78.00%	100%
	(cost incurred till date /total estimated cost )
	Total revenue (B)	10000000	10000000	10000000
	Total revenue recognized (A *B)	3000000	7800000	10000000
Less	Revenue recognized in previous year	0	3000000	7800000
	revenue recognized in current year	3000000	4800000	2200000
		2018	2019	2020
	Revenue	3000000	4800000	2200000
Less	Cost incurred	2490000	3984000	2008600
	Gross profit	510000	816000	191400

2.

	Percentage completion method	2018	2019	2020
	Cost incurred in till previous year	0	2490000	6305000
ADD	Cost incurred during the year	2490000	3815000	3945000
	Total cost incurred till date	2490000	6305000	10250000
ADD	Estimated cost to be incurred	5810000	4130000	0
	Total estimated cost to be incurred	8300000	10435000	10250000
	Percentage of completion (A)	30%	60.42%	100%
	(cost incurred till date /total estimated cost )
	Total revenue (B)	10000000	10000000	10000000
	Total revenue recognized (A *B)	3000000	6042166	10000000
Less	Revenue recognized in previous year	0	3000000	6042166
	revenue recognized in current year	3000000	3042166	3957834
		2018	2019	2020
	Revenue	3000000	3042166	3957834
Less	Cost incurred	2490000	3815000	3945000
	Gross profit	510000	-772834	12834