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In: Accounting
[The following information applies to the questions displayed below.] In 2021, the Westgate Construction Company entered...
[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 | 2,016,000 | 2,808,000 | 2,613,600 |
| Estimated costs to complete as of year end | 5,184,000 | 2,376,000 | 0 |
| Billings during the year | 2,180,000 | 2,644,000 | 5,176,000 |
| Cash collections during the year | 1,890,000 | 2,500,000 | 5,610,000 |
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 | 2,800,000 | 3,900,000 | 3,300,000 |
| Gross Profit (Loss) | 784,000 | 1,092,000 | ? |
Steps please..
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Expert Solution
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| Westgate | ||||
| Particulars | 2021 | 2022 | 2023 | Note |
| Contract Price | 10,000,000 | 10,000,000 | 10,000,000 | A |
| Cost Incurred during the year | 2,016,000 | 2,808,000 | 2,613,600 | C |
| Cost Incurred to date | 2,016,000 | 4,824,000 | 7,437,600 | |
| Estimated cost to complete | 5,184,000 | 2,376,000 | - | D |
| Estimated total cost | 7,200,000 | 7,200,000 | 7,437,600 | E=C+B |
| (Cost Incurred to date+ Estimated cost to complete ) | ||||
| Percentage complete | 28.00% | 67.00% | 100.00% | F=B/E |
| (Cost Incurred to date/Estimated total cost) | ||||
| Revenue to be recognized | 2,800,000 | 3,900,000 | 3,300,000 | G |
| Gross Profit/(Loss) | 784,000 | 1,092,000 | 686,400 | H=G-C |
| Formula of revenue to be recognized |
| (Contract Price*Percentage complete)- revenue previously recognized |
| Year 2021: 28% completed. Revenue recognized = 28% x $ 10,00,000 = $ 2,800,000 |
| Year 2022: 67% completed. Revenue recognized = 67% x $ 10,00,000 – $ 2,800,000 (previously recognized) = $ 3,900,000. |
| Year 2023: 100% completed. Revenue recognized = 100% x $ 10,000,000 – $ 2,800,000 $ - 3,900,000 (previously recognized) = $ 3,300,000. |
ekkarill92 answered 1 year agoRelated Solutions
[The following information applies to the questions displayed below.] In 2021, the Westgate Construction Company entered...
[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
$
2,100,000
$
2,450,000
$
2,695,000
Estimated costs to complete as of year-end
4,900,000
2,450,000
0
Billings during the year
2,200,000
2,350,000
5,450,000
Cash collections during the year
1,900,000...
[The following information applies to the questions displayed below.] In 2021, the Westgate Construction Company entered...
[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
$
2,542,000
$
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...
The following information applies to the questions displayed below.] In 2021, the Westgate Construction Company entered...
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
$
2,604,000
$
4,032,000
$
1,940,400
Estimated costs to complete as of year-end
5,796,000
1,764,000
0
Billings during the year
2,040,000
4,596,000
3,364,000
Cash collections during the year
1,820,000...
The following information applies to the questions displayed below.] In 2018, the Westgate Construction Company entered...
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
$
2,184,000
$
3,510,000
$
2,316,600
Estimated costs to complete as of year-end
5,616,000
2,106,000
0
Billings during the year
2,120,000
3,574,000
4,306,000
Cash collections during the year
1,860,000...
Required information [The following information applies to the questions displayed below.] In 2021, the Westgate Construction...
Required information
[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
$
2,580,000
$
4,042,000
$
2,175,800
Estimated costs to complete as of year-end
6,020,000
1,978,000
0
Billings during the year
2,060,000
4,562,000
3,378,000
Cash collections during the...
Required information [The following information applies to the questions displayed below.] In 2021, the Westgate Construction...
Required information
[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
$
2,580,000
$
4,042,000
$
2,175,800
Estimated costs to complete as of year-end
6,020,000
1,978,000
0
Billings during the year
2,060,000
4,562,000
3,378,000
Cash collections during the...
Required information [The following information applies to the questions displayed below.] In 2021, the Westgate Construction...
Required information
[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
$
2,204,000
$
3,192,000
$
2,424,400
Estimated costs to complete as of year-end
5,396,000
2,204,000
0
Billings during the year
2,140,000
3,256,000
4,604,000
Cash collections during the...
Required information [The following information applies to the questions displayed below.] In 2021, the Westgate Construction...
Required information
[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
$
2,640,000
$
2,300,000
$
2,926,000
Estimated costs to complete as of year-end
6,160,000
2,660,000
0
Billings during the year
2,080,000
2,860,000
5,060,000
Cash collections during the...
[The following information applies to the questions displayed below.] In 2018, the Westgate Construction Company...
[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
$
2,072,000
$
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...
Required information [The following information applies to the questions displayed below.] In 2018, the Westgate Construction...
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...
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