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:

Assume that Westgate Construction’s contract with Santa Clara County does not qualify for revenue recognition over time.

Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.
2-a.In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred).
2-b.In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs incurred).
2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs incurred).
3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract.
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.

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.

Hayes Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $100,000 cash. The following information was gathered. Description Initial Cost on Seller’s Books Depreciation to Date on Seller’s Books Book Value on Seller’s Books Appraised Value Machinery $100,000 $50,000 $50,000 $90,000 Equipment 60,000 10,000 50,000 30,000 Asset 3: This machine was acquired by making a $10,000 down payment and issuing a $30,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $15,000 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $35,900. Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows. Cost of machinery traded $100,000 Accumulated depreciation to date of sale 40,000 Fair value of machinery traded 80,000 Cash received 10,000 Fair value of machinery acquired 70,000 Asset 5: Equipment was acquired by issuing 100 shares of $8 par value common stock. The stock had a market price of $11 per share. Construction of Building: A building was constructed on land purchased last year at a cost of $150,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows. Date Payment 2/1 $120,000 6/1 360,000 9/1 480,000 11/1 100,000 To finance construction of the building, a $600,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $200,000 of other outstanding debt during the year at a borrowing rate of 8%. Record the acquisition of each of these assets.

The managers at Melody’s Movie theater are considering whether to upgrade their film projector. The upgraded projector costs $120,000 and will last for an estimated 6 years. It will be depreciated using the 3-year MACRS schedule. The upgraded projector will have an estimated $5,000 salvage value in year 7.

The upgraded projector will replace the theater’s existing projector. The existing projector was purchased 5 years ago, for $45,000. The old projector was also depreciated using the 3-year MACRS schedule. If the old projector is replaced, it will be sold immediately (in year 0) for $20,000. If the old projector is not replaced, it will last for 6 more years, and will be sold as scrap for $1,000 in year 7.

With the new projector, Melody’s Movie theater will be able to show enhanced 3D films, and they estimate that their annual sales will increase from $200,000 per year to $260,000 per year. Total operating costs associated with the business will not be affected by the new projector. Costs will be $110,000 per year regardless of projector.

Melody’s corporate tax rate is 30%.

a. Calculate the capital spending cash flows for the project.

b. Calculate the operating cash flows for years 1 to 6.

Job Costs Using a Plantwide Overhead Rate Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $280,000, and budgeted direct labor hours were 16,000. The average wage rate for direct labor is expected to be $35 per hour. During June, Naranjo Company worked on four jobs. Data relating to these four jobs follow: Job 39 Job 40 Job 41 Job 42 Beginning balance $22,400 $35,100 $17,100 $1,900 Materials requisitioned 19,200 21,800 12,700 12,100 Direct labor cost 10,300 18,900 7,350 3,000 Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 110 percent of cost. (Naranjo had originally developed Job 40 to order for a customer; however, that customer was near bankruptcy and the chance of Naranjo being paid was growing dimmer. Naranjo decided to hold Job 40 in inventory while the customer worked out its financial difficulties. Job 40 is the only job in Finished Goods Inventory.) Jobs 41 and 42 remain unfinished at the end of the month.

Required:

1. Calculate the overhead rate based on direct labor cost.

% of direct labor cost

2. Set up a simple job-order cost sheet for all jobs in process during June.

Naranjo Company Job-Order Cost Sheets

Job 39 Job 40 Job 41 Job 42

Balance, June 1 $ $    $ $

Direct materials    $    $ $ $

Direct Labor $    $    $ $

Total $    $ $    $

3. What if the expected direct labor rate at the beginning of the year was $28 instead of $35? What would the overhead rate be? If required, round your overhead rate answer to one decimal place.

New budgeted direct labor cost = $

New overhead rate = % of direct labor cost

(For entries with a​ $0 balance, make sure to enter​ "0" in the appropriate cell. Round the contribution margin percentage to the nearest whole​ percent.) Variable Fixed Total Operating Contribution Case Revenues Costs Costs Costs Income Margin Percentage.

Please fill in all the missing data where the question marks are.

On January 1, 2018, Fulton Corporation purchased land as a factory site for $80,000. Fulton paid $30,000 and signed a noninterest-bearing note requiring the company to pay the remaining $50,000 on January 1, 2021. An interest rate of 5% properly reflects the time value of money for this type of loan agreement. An old building on the property was demolished, and construction began on a new building that was completed on December 31, 2018. Costs incurred during this period are listed below:

Demolition of old building                                                                 $6,000

Architect’s fees (for new building)                                                     10,000

Legal fees for title investigation of land                                               2,000

Property taxes on land (for period beginning March 1, 2018)             5,100   

Construction costs                                                                            620,000   

Interest on construction loan                                                                3,000

Salvaged materials resulting from the demolition of the old building were sold for $1,000. The amounts Fulton should capitalize as the cost of the land and the new building would be

Grouper Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $5,024,000 on January 1, 2017. Grouper expected to complete the building by December 31, 2017. Grouper has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2016 $1,990,600 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2018 1,603,500 Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2021 990,300 Compute the depreciation expense for the year ended December 31, 2018. Grouper elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $302,800. (Round answer to 0 decimal places, e.g. 5,275.)

On March 1, 2010, Packard Company purchased land for an office site by paying $600,000 cash. Packard began construction on the office building one year later on March 1, 2011. The following expenditures were incurred for construction on each of the respective dates: Date Amount March 1, 2011 $680,000 April 1, 2011 $352,000 May 1, 2011 $450,000 June 1, 2011 $520,000 The office was completed and ready for occupancy on July 1. To help pay for construction, $400,000 of common stock was issued on March 1, 2011. The only debts outstanding during 2011 was a $150,000, 11%, 6-year note payable dated January 1, 2011 and a $300,000, 13%, 10-year note payable dated July 1, 2009. Neither of these notes were paid off prior to their respective maturity dates. The amount of interest cost to be capitalized by Packard during 2011 is

Allocating Payments and Receipts to Fixed Asset Accounts

The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk.