Question

In 2018, the West $10,000,000. gate Construction Company entered into a contract to construct a road for Santa Clara County for The road was completed in 2020. Information related to the contract is as follows: 2020 2018 2,542,000 $3,772,000 $2,074,600 5, 658,000 1,886,000 2,020,000 4,294,000 3,686,000 1,810,000 3,800,000 4,390,000 2019 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Required: 1. Calculate the amount of revenue and gross profit (oss) to be recognized in each of the three years. (Do not round Intermediate calculations. Loss amounts should be indicated with a minus sign.) 2018 2019 2020 Revenue Gross profit (loss)--

Answer 1

Solution

	2018	2019	2020
Revenue	$       31,00,000.00	$ 46,00,000.00	$      23,00,000.00
Gross profit	$         5,58,000.00	$    8,28,000.00	$        2,25,400.00

Working

Working		2018	2019	2020
A	Contract Price	$    1,00,00,000	$        1,00,00,000	$       1,00,00,000
B	Cost Incurred to Date	$        25,42,000	$            63,14,000	$           83,88,600
C	Estimated cost yet to be incurred to complete the contract	$        56,58,000	$            18,86,000	$                          -
D = B+C	Total Cost	$        82,00,000	$            82,00,000	$           83,88,600
E = (D/B) x 100	% of Complition	31%	77%	100%
F = A x E	Revenue to date	$ 31,00,000.00	$      77,00,000.00	$ 1,00,00,000.00
G	Revenue of Previous year	$                       -	$      31,00,000.00	$     77,00,000.00
H = F - G	Net Revenue this year	$ 31,00,000.00	$      46,00,000.00	$     23,00,000.00
I	Cost to date	$ 25,42,000.00	$      63,14,000.00	$     83,88,600.00
J	Cost to date of previous year	$                       -	$      25,42,000.00	$     63,14,000.00
K = I - J	Net Cost for the year	$ 25,42,000.00	$      37,72,000.00	$     20,74,600.00
L = H - K	Gross Profits	$    5,58,000.00	$        8,28,000.00	$       2,25,400.00