Question

Required information The following information applies to the questions displayed below.) 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: 2020 $2,200,000 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2018 $2,400,000 5,600,000 2,000,000 1,800,000 2019 $3,600,000 2,000,000 4,000,000 3,600,000 4,000,000 4,600,000 Westgate recognizes revenue over time according to percentage of completion 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). Complete this question by entering your answers in the tabs below. Reg 2A Req 28 Req 2c In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts for construction costs incurred). (If no entry is required for transaction/event, select "No journal entry required" in the first account field.) View transaction list

Answer 1

POCM Computation

	Latest forecast				Actuals
Particulars	Contract Value	Total Budgeted Cost	Budgeted Profit (Loss)	Budgeted Profit (Loss) %	Cost incurred upto Reporting Date	Stage of Completion (%)	Revenue Recognition	Profit (Loss)	Profit (Loss) %	Expected loss	Total Profit (Loss)	Progress Billings (Certified Amount)	WIP
YTD- Dec'20	10,000,000	8,200,000	1,800,000	18.00%	8,200,000	100.00	10,000,000	1,800,000	18.00%	-	1,800,000	10,000,000	-
YTD- Dec'19	10,000,000	8,000,000	2,000,000	20.00%	6,000,000	75.00	7,500,000	1,500,000	20.00%	-	1,500,000	6,000,000	1,500,000
YTD- Dec'18	10,000,000	8,000,000	2,000,000	20.00%	2,400,000	30.00	3,000,000	600,000	20.00%	-	600,000	2,000,000	1,000,000

Journal Entries to be passed for westgate construction company for the year 2018

(I) Construction in progress A/c 2,400,000

To Cash 2,400,000

(Being amount paid for construction)

(II) Accounts receivable A/c Dr. 2,000,000

   To Billings on construction contract 2,000,000

(being amount billed to customer)

(III) Cash A/c Dr. 1,800,000

   To Accounts receivable A/c 1,800,000

(being cash collected from accounts receivable)

(IV) Construction in progress A/c 1,000,000

Construction expense A/c 2,000,000

To Construction revenue A/c 3,000,000

(being revenue recognised for the year)

Journal Entries to be passed for westgate construction company for the year 2019

(I) Construction in progress A/c 3,600,000

To Cash 3,600,000

(Being amount paid for construction)

(II) Accounts receivable A/c Dr. 4,000,000

   To Billings on construction contract 4,000,000

(being amount billed to customer)

(III) Cash A/c Dr. 3,600,000

   To Accounts receivable A/c 3,600,000

(being cash collected from accounts receivable)

(IV) Construction in progress A/c 800,000

Construction expense A/c 3,800,000

To Construction revenue A/c 4,500,000

(being revenue recognised for the year)

Journal Entries to be passed for westgate construction company for the year 2020

(I) Construction in progress A/c 2,200,000

To Cash 2,200,000

(Being amount paid for construction)

(II) Accounts receivable A/c Dr. 4,000,000

   To Billings on construction contract 4,000,000

(being amount billed to customer)

(III) Cash A/c Dr. 4,600,000

   To Accounts receivable A/c 4,600,000

(being cash collected from accounts receivable)

(IV) Construction expense A/c 2,500,000

To Construction revenue A/c 2,500,000

(being revenue recognised for the year)

(V) Billing on construction contract A/c 10,000,000

   To Construction in progress 10,000,000

(being contra account set off)