Question

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	$	2,490,000		$	3,984,000		$	2,008,600
Estimated costs to complete as of year-end		5,810,000			1,826,000			0
Billings during the year		2,030,000			4,444,000			3,526,000
Cash collections during the year		1,815,000			3,900,000			4,285,000

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.)

Balance Sheet (Partial) 2018 2019 Current assets: Accounts receivable $215,000 Construction in progress Less: Billings (2,030,000) Costs and profit in excess of billings (2,030,000) 0 Current liabilities:

2019 is cut off, I need that as well.

Answer 1

Calculations of the percentage of completion:

All amounts are in $

Particulars	2018	2019	2020
Cost Incurred during the year (a)	2490000	3984000	2008600
Accumulated Costs (b)	2490000	6474000	8482600
Further Cost Estimated to complete the project (c)	5810000	1826000	0
Total (d=b+c)	8300000	8300000	8482600
% of completion (e=b/d*100)	30%	78%	100%
Revenue to be recognised (f)	3000000	7800000	10000000
Billing done (g)	2030000	4444000	3526000
Accumulated Billing (h)	2030000	6474000	10000000
Unbilled Revenue (i = f - h)	970000	1326000	0
Cash Received (j)	1815000	3900000	4285000
Accumulated cash received (k)	1815000	5715000	10000000
Trade Receivable (l = h-k)	215000	759000	0

2) Completing the partial balance sheet:

Balance Sheet (Partial)	2018		2019
Current Assets
Accounts Receivable		$215000		$759000
Construction In Progress (Unbilled Revenue)		$970000		$1326000
Less: Billings	($2030000)		($4444000)
Cost and Profit in excess of Billing		($2030000)		($4444000)