Question

show working please

et to search No results < > Options 6C - LT Contracts Saved Help Save Ti ne 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: 2023 $2,238,800 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2021 $2,610,899 6,390,000 2,100,000 1,850,000 2022 $3,162,800 2,028,888 3,672,000 3,000,000 4,228,888 5,150,000 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 < Prev 2 3 4 – 6 of 8 1 Next > ere to search

Answer 1

Solution

	2021	2022	2023
Revenue	$             2,900,000	$        4,500,000	$            2,600,000
Gross profit	$                290,000	$        1,338,000	$                369,200

Working

Working		2021	2022	2023
A	Contract Price	$ 10,000,000	$ 10,000,000	$ 10,000,000
B	Cost Incurred to Date	$ 2,610,000	$ 5,772,000	$ 8,002,800
C	Estimated cost yet to be incurred to complete the contract	$ 6,390,000	$ 2,028,000	$ 0
D = B+C	Total Cost	$ 9,000,000	$ 7,800,000	$ 8,002,800
E = (D/B) x 100	% of Completion	29%	74%	100%
F = A x E	Revenue to date	$ 2,900,000	$ 7,400,000	$ 10,000,000
G	Revenue of Previous year	$ 0	$ 2,900,000	$ 7,400,000
H = F - G	Net Revenue this year	$ 2,900,000	$ 4,500,000	$ 2,600,000
I	Cost to date	$ 2,610,000	$ 5,772,000	$ 8,002,800
J	Cost to date of previous year	$ 0	$ 2,610,000	$ 5,772,000
K = I - J	Net Cost for the year	$ 2,610,000	$ 3,162,000	$ 2,230,800
L = H - K	Gross Profits	$ 290,000	$ 1,338,000	$ 369,200