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: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2021 $2,291,000 5,609,000 2,110,000 1,855,000 2022 $3,555,000 2,054,000 3,736,000 3,500,000 2023 $2,259,400 0 4,154,000 4,645,000 Westgate recognizes revenue over time according to percentage of completion. 2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs incurred).

Answer 1

UN WWA 2021 2022 10,000,000 10,000,000 10,000,000 ale Page: No O za @be B Gross Profit / lows) Particular 2023 Contract price cost incurred during the year 2291000 3555000 2259400 cost incurred to date 2291000 5846000 8105400 Estimated cost to complete 5609000 2054000 | Estimated total cost 4900,000 7900,000 8105400 Percentage Complete 29% 100%. Revenue to be recognized 2900,000 4500,000 2600,000 Gross Profit (loss) 609000 945000 340600 Billings dering the years 2110,000 3736000 4154000 cash collections during the year 1855000 3500,000 4645000 2011 coof incevered to date = 2291000 Pencentage complete = 22291000_ x100 = 297 7900,000 Revenue to be recognized = [contract price x . Complete — revenue previously recognized - (10,000,000 X 29:6) -0 = $2900,000

Page. No @ Groes profit (tom) = 2900,000 – 2291000 = $609000 2002 Cost Incuvied to date : 2291000 + 3555000 = $5846000 Yercentage complete - 5846000 xroo 7900,000 = 949 Revenue to be recognized = (10,000,000 x 74%) – 2900,000 $ 4500,000 Gross profit Cloms) = 4500,000 – 3555000 = $945,000 2023 corof incerred to date = 5846000 + 2259400 = $ 8105400 Percentage complete = 8105400 xico - PO0's, 8105400 Revenue to be recognized = (10,000,000 X 1007.) - 2900.000 – 4500,000 = $ 2600,000 Gross profit/ crons) = 2600,000 – 2259400 = $340600

Page No ③ 2021 2022 2023 | Journal entijes Debit C$) Coedit C$) debitllo) Credit C) debit C4) Gredit (1) costs CIP(work in proces) $2296000 - $3555000 - $2259400 -- incurred Cash $2291000 - 53555000 - $2259400 Billing Accounts receivable $210,000 - Billing on CIP - $2110,000 $3436000 - $454000 - - $3736000 - $4154000 Receiving cash $185500d - $3500,000 - $4645000 payments Accounts receivable - $1855000 - $3509,000 - $4645600 Period end construction expense 2291000 - 3555000 - 2259400 - adjunkroents CIP (w0ls in procen) 609000 945000 - 340600 - for revenue Consbruction yevenuel - 2900,000 - 4500,000 - 2600,000 10,000,000 - Completing Billing on cop the project cop (work in procesy 1 - 10,000,000