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Required information [The following information applies to the questions displayed below.] In 2018, the Westgate Construction

Req 2A Req 2B Req 2C In the journal below, complete the necessary journal entries for the year 2018 (credit Various accounts

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Westgate Construction Company 2018 2019 2020
Ans to 1 Calculation of Gross Profit Ans to 2a and 2b Journal Entries Debit $ Credit $ Debit $ Credit $ Debit $ Credit $
Particulars 2018 2019 2020 Costs Incurred CIP (Work-in-progress)           2,604,000 4,032,000     1,940,400
Contract Price         10,000,000       10,000,000        10,000,000 A Cash 2,604,000 4,032,000     1,940,400
Cost Incurred during the year           2,604,000          4,032,000          1,940,400 B
Estimated cost to complete           5,796,000          1,764,000                        -   C Billing Accounts Receivable           2,040,000 4,596,000     3,364,000
Cost Incurred to date           2,604,000          6,636,000          8,576,400 D Billing on CIP 2,040,000 4,596,000     3,364,000
(Sum total of the cost incurred during the year)
Estimated total cost           8,400,000          8,400,000          8,576,400 E=C+D Receiving Payments Cash           1,820,000 4,000,000     4,180,000
Percentage complete 31.00% 79.00% 100.00% F=D/E Accounts Receivable 1,820,000 4,000,000     4,180,000
(Cost Incurred to date/Estimated total cost)
Revenue to be recognized           3,100,000          4,800,000          2,100,000 G Period end adjustments for Revenue Construction Expense           2,604,000 4,032,000     1,940,400
(Contract Price*Percentage complete)- revenue previously recognized (Gross Profit entry) CIP (Work-in-progress)              496,000      768,000        159,600
Year 2018: 31% completed. Revenue recognized = 31% x $ 10,000,000 = $ 3,100,000. Construction Revenue 3,100,000 4,800,000     2,100,000
Year 2019: 79% completed. Revenue recognized = 79% x $ 10,000,000 – $ 3,100,000 (previously recognized) = $ 4,800,000.
Year 2020: 100% completed. Revenue recognized = 100% x $ 10,000,000 – $ 3,100,000- $ 4,800,000 (previously recognized) = $ 2,100,000. Closing Entry Billing on CIP 10,000,000
Gross Profit/(Loss)              496,000             768,000             159,600 H=G-B CIP (Work-in-progress) 10,000,000
Billings during the year     2,040,000.00    4,596,000.00    3,364,000.00
Collection during the year     1,820,000.00    4,000,000.00    4,180,000.00
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