Question

Required information

[The 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:

	2021			2022			2023
Cost incurred during the year	$	2,604,000		$	4,032,000		$	1,940,400
Estimated costs to complete as of year-end		5,796,000			1,764,000			0
Billings during the year		2,040,000			4,596,000			3,364,000
Cash collections during the year		1,820,000			4,000,000			4,180,000

Westgate recognizes revenue over time according to percentage of completion.

5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)

	2021			2022			2023
Costs incurred during the year	$	2,604,000		$	3,820,000		$	3,960,000
Estimated costs to complete as of year-end		5,796,000			4,140,000			0

2021 2022 2023 Revenue Gross profit (loss)

Answer 1

Solution - In 2021, the westage Construction Company, a road' for Santa Ctara Country for $10,000,000. 2021 2022 2023 Revenue 2,900,000 £1,500,000 2.600,000 290,000 1,338,000 369,200 Gross profit (LOSS) working 2008 2023 10,000,000 5,772,000 10,000,000 8,002,800 9021 contract price 10.000.000 Cost incurred to date 2,610.000 Estimated cost yet to complete 6.390.000 the Contract Total cost 9,000,000 2.028,000 7,800,000 | 8,002,800 %. Of Completion I 20%. 74Y. . 1007. 7,400,000 10,000,000 Revenue to date 2,900,000 Revenue of previas Yeay 2,900.000 7,400,000

Net Revenue this year $ 2,900,000 $4,500,000 $2,600,000 Cost to date $ 2, 610,000 $ 5,772,000 $ 8.002,800 $ 5,772,000 $2610,000 Cost to date of previous year $ 3,162,000 $ 2,2 30,800 2,6101000 Netcost of the year Cross profit $ 369,200 $1,338,000 290,000 :: Total cost (2021) s) 2,610,000 + 6,390,000 [2022] => 5,772,000+2,028,000 (2023] => 8,002,800 +0 = $4,000,000 = $ 7,800,000 =$8,002,800 0.29 : 24%. (2021] - 0.742 74% iiy of Completion -2.610.000 2 x 100 9,000.000 5,272,000 XIDO 7,800,000 [20237 · 8.002:800. x/00 = 8,002,800 100%,

. Revenue to date (2021] = 10,000,000 x 29%. =$2,900,000 [2022] = 10,000,000 x 74 7. $7,400,000 (2023) = 10,000,000 x 100%. = $10,000,000 A Net Revenue this year (2021] 2.900.000 (2022) = 7,400,000:- 2,900,000 (2023) = 10,000,000 - 7,400,000 =$4.500.000 $2,600,000 .. wet cost for the year (2021) = [2022] = (2023] - 2,610,000 5,172,000 - 2,610,000 $3,162 1000 8,002,800 - 5,772,000 =$9, 230, 800 Cross profits (20213 - 2,900,000 - 2,610,000 = $296,000 $1,338,000 (2022 . Lis00.000 - 3,162,000 = $ 369,2.00 2023] - 2,600,000 - 2,230,800