In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara Countyfor $10,000,000. The road was completed in 2020. Information related to the contract is as follows:2018 2019 2020Cost incurred during the year $2,400,000 $3,600,000 $2,200,000Estimated costs to complete as of year-end 5,600,000 2,000,000 –0–Billings during the year 2,000,000 4,000,000 4,000,000Cash collections during the year 1,800,000 3,600,000 4,600,000Westgate recognizes revenue over time according to percentage of completion.Required:1. Calculate the amount of revenue and gross profit to be recognized in each of the three years.2. Prepare all necessary journal entries for each of the years (credit “various accounts” for construction costsincurred).3. Prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract. Indicate whetherany of the amounts shown are contract assets or contract liabilities.4. Calculate the amount of revenue and gross profit to be recognized in each of the three years assuming thefollowing costs incurred and costs to complete information:2018 2019 2020Costs incurred during the year $2,400,000 $3,800,000 $3,200,000Estimated costs to complete as of year-end 5,600,000 3,100,000 –0–
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 recognizes revenue over time according to percentage of completion.
Required:
1. Calculate the amount of revenue and gross profit to be recognized in each of the three years.
2. Prepare all necessary
incurred).
3. Prepare a partial
any of the amounts shown are contract assets or contract liabilities.
4. Calculate the amount of revenue and gross profit to be recognized in each of the three years assuming the
following costs incurred and costs to complete information:
2018 2019 2020
Costs 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–
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