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
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 |
|
2-a. In the journal below, complete the necessary journal entries (construction costs, progress billings, cash collections, gross profit/loss) for the year 2018 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries (construction costs, progress billings, cash collections, gross profit/loss) for the year 2019 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries (construction costs, progress billings, cash collections, gross profit/loss) for the year 2020 (credit "Various accounts" for construction costs incurred). |
|
|
|
||||||
|
|
|||||||||
|
|
|||||||||
|
|
|||||||||
|
|
|||||||||
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. Calculate the amount of revenue and gross profit to be recognized in each of the 3 years assuming the following costs to incur and costs to complete information. ( Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.
2018 2019 2020
Cost incurred during the year $2,016,000 3,890,000 3,290,000
Estimated cost to complete as of year end $5,184,000 3,190,000
In: Accounting
In: Accounting
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 $ 2,044,000 $ 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 percentage of completion. Required:
In: Accounting
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 | $ | 2,550,000 | $ | 4,250,000 | $ | 1,870,000 | |||
| Estimated costs to complete as of year-end | 5,950,000 | 1,700,000 | 0 | ||||||
| Billings during the year | 2,050,000 | 4,750,000 | 3,200,000 | ||||||
| Cash collections during the year | 1,825,000 | 4,100,000 | 4,075,000 | ||||||
Westgate recognizes revenue over time according to percentage of completion.
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.
2021 2022 2023
Revenue ______ _______ ________
Gross P _______ _______ ________
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.
| 2021 | 2022 | 2023 | |||||||
| Costs incurred during the year | $ | 2,550,000 | $ | 3,825,000 | $ | 3,225,000 | |||
| Estimated costs to complete as of year-end | 5,950,000 | 3,125,000 | 0 | ||||||
2021 2022 2023
Revenue ______ _______ ________
Gross P _______ _______ ________
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.
| 2021 | 2022 | 2023 | |||||||
| Costs incurred during the year | $ | 2,550,000 | $ | 3,825,000 | $ | 3,975,000 | |||
| Estimated costs to complete as of year-end | 5,950,000 | 4,150,000 | 0 | ||||||
2021 2022 2023
Revenue ______ _______ ________
Gross P _______ _______ ________
In: Accounting
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 | $ | 2,059,000 | $ | 2,627,000 | $ | 2,655,400 | |||
| Estimated costs to complete as of year-end | 5,041,000 | 2,414,000 | 0 | ||||||
| Billings during the year | 2,190,000 | 2,496,000 | 5,314,000 | ||||||
| Cash collections during the year | 1,895,000 | 2,400,000 | 5,705,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract. (Do not round intermediate calculations.)
In: Accounting
| Problem Set A | ||||||||
| Copeland Company had the following account balances at December 31, 2016, before recording bad debt expense for the year: | ||||||||
| Unadjusted Trial Balance | ||||||||
| Accounts receivable | $1,400,000 | |||||||
| Allowance for uncollectible accounts (credit balance) | 22,000 | |||||||
| Credit sales for 2016 | 1,950,000 | |||||||
| Ending 12/31/2015 | ||||||||
| Balance in Accounts receivable on 1/1/2016 | $1,200,000 | |||||||
| Balance in Allowance for uncollectible accounts (credit balance) on 1/1/2016 | 24,000 | |||||||
| Copeland is considering the following approaches for estimating bad debts for 2016: | ||||||||
| Option A: Based on 3% of credit sales | ||||||||
| Option B: Based on an aging of year-end accounts receivable | ||||||||
| Days | Amount Outstanding | Estimated % Uncollectible | ||||||
| 0-30 | $800,000 | 3% | ||||||
| 31-60 | 300,000 | 6% | ||||||
| 61-120 | 200,000 | 9% | ||||||
| Over 120 | 100,000 | 24% | ||||||
| $1,400,000 | ||||||||
| REQUIRED: | ||||||||
| 1 | Do the adjusting journal entry under Option A and Option B. | |||||||
| 2 | What amounts would be reported on the 12/31/2016 financial statements related to Accounts Receivable under Option A and Option B? | |||||||
| Make sure to include the effect on the Income Statement, Balance Sheet and Statement of Cash Flows (under the Direct AND Indirect Method), and the Statement of Stockholders' Equity. | ||||||||
| 3 | What is the difference in accounts receivable turnover and the credit risk ratio under Option A v. Option B? | |||||||
| 4 | Which option may management prefer? Which option may shareholders or regulators prefer? Please discuss | |||||||
| Option A - Adjusting JE | ||||||||
| Option B - Adjusting JE | ||||||||
| Option A - Financial Statement Effects | ||||||||
| Income Statement | ||||||||
| Balance Sheet | ||||||||
| Statement of Cash Flows - Indirect: | ||||||||
| Statement of Cash Flows - Direct (Cash collected from customers): | ||||||||
| Statement of Stockholder's Equity | ||||||||
| Option B - Financial Statement Effects | ||||||||
| Income Statement | ||||||||
| Balance Sheet | ||||||||
| Statement of Cash Flows - Indirect: | ||||||||
| Statement of Cash Flows - Direct (Cash collected from customers): | ||||||||
| Statement of Stockholder's Equity | ||||||||
| Option A - AR Ratios | ||||||||
| Turnover | ||||||||
| CR Ratio | ||||||||
| Option B - AR Ratios | ||||||||
| Turnover | ||||||||
| CR Ratio | ||||||||
In: Accounting