Question
In: Accounting
Chapter 6, #5 In 2021, the Westgate Construction Company entered into a contract to construct a...
Chapter 6, #5
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 | $ | 2,542,000 | $ | 3,772,000 | $ | 2,074,600 | |||
| Estimated costs to complete as of year-end | 5,658,000 | 1,886,000 | 0 | ||||||
| Billings during the year | 2,020,000 | 4,294,000 | 3,686,000 | ||||||
| Cash collections during the year | 1,810,000 | 3,800,000 | 4,390,000 | ||||||
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.)
| 2021 | 2022 | 2023 | |
| Revenue | |||
| Gross profit(loss) |
Solutions
Expert Solution
| Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks! |
| Westgate Construction Company | |||||
| Ans to 1 | Calculation of Gross Profit | ||||
| Particulars | 2021 | 2022 | 2023 | ||
| Contract Price | 10,000,000 | 10,000,000 | 10,000,000 | A | |
| Cost Incurred during the year | 2,542,000 | 3,772,000 | 2,074,600 | B | |
| Estimated cost to complete | 5,658,000 | 1,886,000 | - | C | |
| Cost Incurred to date | 2,542,000 | 6,314,000 | 8,388,600 | D | |
| (Sum total of the cost incurred during the year) | |||||
| Estimated total cost | 8,200,000 | 8,200,000 | 8,388,600 | E=C+D | |
| Percentage complete | 31.00% | 77.00% | 100.00% | F=D/E | |
| (Cost Incurred to date/Estimated total cost) | |||||
| Revenue to be recognized | 3,100,000 | 4,600,000 | 2,300,000 | G | |
| (Contract Price*Percentage complete)- revenue previously recognized | |||||
| Year 2021: 31% completed. Revenue recognized = 31% x $ 10,000,000 = $ 3,100,000. | |||||
| Year 2022: 77% completed. Revenue recognized = 77% x $ 10,000,000 – $ 3,100,000 (previously recognized) = $ 4,600,000. | |||||
| Year 2023: 100% completed. Revenue recognized = 100% x $ 10,000,000 – $ 3,100,000- $ 4,600,000 (previously recognized) = $ 2,300,000. | |||||
| Gross Profit/(Loss) | 558,000 | 828,000 | 225,400 | H=G-B | |
ekkarill92 answered 1 year agoRelated Solutions
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
1,584,000
$
3,240,000
$
2,613,600
Estimated costs to complete as of year-end
5,616,000
2,376,000
0
Billings during the year
1,200,000
3,624,000
5,176,000
Cash collections during the year
1,000,000
2,800,000
6,200,000
Assume that Westgate Construction’s contract with Santa...
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,100,000
$
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 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
3,471,000
$
4,005,000
$
1,566,400
Estimated costs to complete as of year-end
5,429,000
1,424,000
0
Billings during the year
2,900,000
4,576,000
2,524,000
Cash collections during the year
2,700,000
4,500,000
2,800,000
Assume that Westgate Construction’s contract with Santa...
In 2021, the Westgate Construction company entered into a contract to construct a road for Santa...
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.
2018
2019
2020
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
5. Calculate the amount of revenue and...
In 2021, the Westgate Construction company entered into a contract to construct a road for Santa...
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.
2018
2019
2020
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
3. Complete the information required below to...
in 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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 2020. Information related to
the contract is as follows: 2018 2019 2020 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...
In 2021, the Westgate Construction Company entered into a contract to construct a bridge for $12,000,000....
In 2021, the Westgate Construction Company entered into a
contract to construct a bridge for $12,000,000.
The bridge was completed in 2023. Information related to the
contract is as follows:
2021 2022 2023
Cost incurred during the year $1,840,000 $3,760,000
$4,500,000
Estimated costs to complete as of year-end $6,160,000 $5,600,000
$0
Billings during the year $3,000,000 $4,000,000 $5,000,000
Cash collections during thee year $2,600,000
$3,900,000 $5,100,000
a. Westgate recognizes revenue over time according to percentage
of completion....
In 2021, the Westgate Construction Company entered into a contract to construct a bridge for $12,000,000....
In 2021, the Westgate Construction Company entered into a
contract to construct a bridge for $12,000,000.
The bridge was completed in 2023. Information related to the
contract is as follows:
2021 2022 2023
Cost incurred during the year $1,840,000 $3,760,000
$4,500,000
Estimated costs to complete as of year-end $6,160,000 $5,600,000
$0
Billings during the year $3,000,000 $4,000,000 $5,000,000
Cash collections during thee year $2,600,000
$3,900,000 $5,100,000
a. Westgate recognizes revenue over time according to percentage
of completion....
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,400,000
$
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
Assume that Westgate Construction’s contract with Santa...
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,490,000
$
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...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 1. Why do most leases have expensive cancellation provisions? Does the existence of this provision shift...
- The requirements for your assignment are: Decode the IP address 172.16.31.255 /20 Determine the following: Subnet...
- Examine the various types of contracts available to Toyota when dealing with international suppliers and advise...
- Problem 10-08 NPVs, IRRs, and MIRRs for Independent Projects Edelman Engineering is considering including two pieces...
- Give an example for market segmentation for a new company developing either products for cats or...
- Suppose you have set a specific goal for the balance in your savings account 12 years...
- Explain in very good details the hardening and procedures of Microsoft Server 2019
ADVERTISEMENT