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 | $ | 2,640,000 | $ | 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 year | 1,840,000 | 2,800,000 | 5,360,000 | ||||||
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.
2-a. In the journal below, complete the necessary
journal entries for the year 2018 (credit "Various accounts" for
construction costs incurred).
2-b. In the journal below, complete the necessary
journal entries for the year 2019 (credit "Various accounts" for
construction costs incurred).
2-c. In the journal below, complete the necessary
journal entries for the year 2020 (credit "Various accounts" for
construction costs incurred).
3. Complete the information required below to
prepare a partial balance sheet for 2018 and 2019 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.
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,640,000 | $ | 3,840,000 | $ | 3,240,000 | |||
| Estimated costs to complete as of year-end | 6,160,000 | 3,140,000 | 0 | ||||||
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.
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,640,000 | $ | 3,840,000 | $ | 4,020,000 | |||
| Estimated costs to complete as of year-end | 6,160,000 | 4,180,000 | 0 | ||||||
In: Accounting
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 | $ | 2,100,000 | $ | 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 percentage of
completion.
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 2018 (credit "Various accounts" for
construction costs incurred).
2-b. In the journal below, complete the necessary
journal entries for the year 2019 (credit "Various accounts" for
construction costs incurred).
2-c. In the journal below, complete the necessary
journal entries for the year 2020 (credit "Various accounts" for
construction costs incurred).
3. Complete the information required below to
prepare a partial balance sheet for 2018 and 2019 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.
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,100,000 | $ | 3,875,000 | $ | 3,275,000 | |||
| Estimated costs to complete as of year-end | 5,400,000 | 3,175,000 | 0 | ||||||
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.
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,100,000 | $ | 3,875,000 | $ | 4,125,000 | |||
| Estimated costs to complete as of year-end | 5,400,000 | 4,250,000 | 0 | ||||||
Please help, i am so confused.....
In: Accounting
Before the audit report was signed, the audit team encountered the following situation. Treat each situation independently and assume the remaining financial statements are fine. The audit report was signed on 5 August 2020, The financial statements were signed by the BoD on the same day, which was subsequently released to shareholders on 12 August 2020.
1) A property owned by Cook’s Furniture Ltd was sold to Lidia Preston, the wife of Howard Cook in June 2020 (refer to case description in part A). The property has a market value of four million and was sold at 3.2 million. Management did not disclose this in the financial statement because they believed this was a private matter. The disposal of this asset has been appropriately accounted for on the financial statements (e.g. the asset was removed from PPE and the loss of disposal was correctly recognised as an expense).
2) The subsequent selling price of the ready-made furniture range suggests the inventory valuation as at 30 June 2020 should be written down by $48,000 but management only wrote $38,000 off as per the financial statements because they were confident that they can increase the selling price again in 2021 after people settling back to normality.
3) Carl Cook decided to retire in 2021 due to health reasons, Carl is willing to sell his shareholding to the remaining shareholders. However, the BoD decided to explore the potential of selling the business. By the time to sign the 2020 financial statements, the company has not commenced a negotiation with any potential buyer. The BoD said to the auditor that they may not sell the business if they cannot get a good deal. Carl’s retirement decision is disclosed on the financial statements, but not the intention to sell the business.
REQUIRED:
For each of the above situation:
a) Discuss the audit procedure that the auditor needs to perform in relation to each situation.
b) Explain which audit opinion is appropriate for each situation.
In: Accounting
n 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 | $ | 2,100,000 | $ | 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 | 2,300,000 | 5,800,000 | ||||||
Westgate recognizes revenue over time according to the percentage
of completion.
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 2018 (credit "Various accounts" for
construction costs incurred).
2-b. In the journal below, complete the necessary
journal entries for the year 2019 (credit "Various accounts" for
construction costs incurred).
2-c. In the journal below, complete the necessary
journal entries for the year 2020 (credit "Various accounts" for
construction costs incurred).
3. Complete the information required below to
prepare a partial balance sheet for 2018 and 2019 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.
| 2018 | 2019 | 2020 | |||||||
| The cost incurred during the year | $ | 2,100,000 | $ | 3,900,000 | $ | 3,300,000 | |||
| Estimated costs to complete as of year-end | 4,900,000 | 3,200,000 | 0 | ||||||
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.
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,100,000 | $ | 3,900,000 | $ | 4,200,000 | |||
| Estimated costs to complete as of year-end | 4,900,000 | 4,300,000 | 0 | ||||||
In: Accounting
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 | $ | 2,400,000 | $ | 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 | ||||||
Westgate Construction uses the completed contract method of
accounting for long-term construction contracts.
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 2018 (credit "Various accounts" for
construction costs incurred).
2-b.In the journal below, complete the necessary
journal entries for the year 2019 (credit "Various accounts" for
construction costs incurred).
2-c. In the journal below, complete the necessary
journal entries for the year 2020 (credit "Various accounts" for
construction costs incurred).
3. Complete the information required below to
prepare a partial balance sheet for 2018 and 2019 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.
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,400,000 | $ | 3,800,000 | $ | 3,200,000 | |||
| Estimated costs to complete as of year-end | 5,600,000 | 3,100,000 | 0 | ||||||
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.
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,400,000 | $ | 3,800,000 | $ | 3,900,000 | |||
| Estimated costs to complete as of year-end | 5,600,000 | 4,100,000 | 0 | ||||||
In: Accounting
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 |
$ |
2,523,000 |
$ |
3,177,000 |
$ |
1,980,000 |
|||
|
Estimated costs to complete as of year-end |
6,177,000 |
1,800,000 |
0 |
||||||
|
Billings during the year |
2,070,000 |
3,630,000 |
4,300,000 |
||||||
|
Cash collections during the year |
1,835,000 |
3,400,000 |
4,765,000 |
||||||
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.
2-a. In the journal below, complete the necessary
journal entries for the year 2018 (credit "Various accounts" for
construction costs incurred).
2-b. In the journal below, complete the necessary
journal entries for the year 2019 (credit "Various accounts" for
construction costs incurred).
2-c. In the journal below, complete the necessary
journal entries for the year 2020 (credit "Various accounts" for
construction costs incurred).
3. Complete the information required below to
prepare a partial balance sheet for 2018 and 2019 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.
|
2018 |
2019 |
2020 |
|||||||
|
Cost incurred during the year |
$ |
2,523,000 |
$ |
3,835,000 |
$ |
3,235,000 |
|||
|
Estimated costs to complete as of year-end |
6,177,000 |
3,135,000 |
0 |
||||||
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.
|
2018 |
2019 |
2020 |
|||||||
|
Cost incurred during the year |
$ |
2,523,000 |
$ |
3,835,000 |
$ |
4,005,000 |
|||
|
Estimated costs to complete as of year-end |
6,177,000 |
4,170,000 |
0 |
||||||
In: Accounting
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 | $ | 2,291,000 | $ | 3,555,000 | $ | 2,259,400 | |||||
| Estimated costs to complete as of year-end | 5,609,000 | 2,054,000 | 0 | ||||||||
| Billings during the year | 1,900,000 | 3,946,000 | 4,154,000 | ||||||||
| Cash collections during the year | 1,700,000 | 3,500,000 | 4,800,000 | ||||||||
Westgate Construction uses the completed contract method of
accounting for long-term construction contracts.
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 2018 (credit "Various accounts" for
construction costs incurred).
2-b. In the journal below, complete the necessary
journal entries for the year 2019 (credit "Various accounts" for
construction costs incurred).
2-c. In the journal below, complete the necessary
journal entries for the year 2020 (credit "Various accounts" for
construction costs incurred).
3. Complete the information required below to
prepare a partial balance sheet for 2018 and 2019 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.
| 2018 | 2019 | 2020 | |||||||||
| Cost incurred during the year | $ | 2,510,000 | $ | 3,855,000 | $ | 3,210,000 | |||||
| Estimated costs to complete as of year-end | 5,710,000 | 3,210,000 | 0 | ||||||||
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.
| 2018 | 2019 | 2020 | |||||||||
| Cost incurred during the year | $ | 2,510,000 | $ | 3,855,000 | $ | 4,065,000 | |||||
| Estimated costs to complete as of year-end | 5,710,000 | 4,210,000 | 0 | ||||||||
In: Accounting
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 $ 1,491,000 $ 3,195,000 $ 2,655,400 Estimated costs to complete as of year-end 5,609,000 2,414,000 0 Billings during the year 1,100,000 3,586,000 5,314,000 Cash collections during the year 900,000 2,700,000 6,400,000 Westgate Construction uses the completed contract method of accounting for long-term construction contracts. 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 2018 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred). 3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 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. 2018 2019 2020 Cost incurred during the year $ 2,590,000 $ 3,895,000 $ 3,290,000 Estimated costs to complete as of year-end 5,790,000 3,290,000 0 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. 2018 2019 2020 Cost incurred during the year $ 2,590,000 $ 3,895,000 $ 4,185,000 Estimated costs to complete as of year-end 5,790,000 4,290,000 0
In: Accounting
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 | $ | 2,016,000 | $ | 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.
2-a. In the journal below, complete the necessary
journal entries for the year 2018 (credit "Various accounts" for
construction costs incurred).
2-b. In the journal below, complete the necessary
journal entries for the year 2019 (credit "Various accounts" for
construction costs incurred).
2-c. In the journal below, complete the necessary
journal entries for the year 2020 (credit "Various accounts" for
construction costs incurred).
3. Complete the information required below to
prepare a partial balance sheet for 2018 and 2019 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.
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,016,000 | $ | 3,890,000 | $ | 3,290,000 | |||
| Estimated costs to complete as of year-end | 5,184,000 | 3,190,000 | 0 | ||||||
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.
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,016,000 | $ | 3,890,000 | $ | 4,170,000 | |||
| Estimated costs to complete as of year-end | 5,184,000 | 4,280,000 | 0 | ||||||
In: Accounting
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 $ 2,604,000 $ 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 4,000,000 4,180,000 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. 2-a. In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred). 3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 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. 2018 2019 2020 Cost incurred during the year $ 2,604,000 $ 3,820,000 $ 3,220,000 Estimated costs to complete as of year-end 5,796,000 3,120,000 0 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. 2018 2019 2020 Cost incurred during the year $ 2,604,000 $ 3,820,000 $ 3,960,000 Estimated costs to complete as of year-end 5,796,000 4,140,000 0
In: Accounting