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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:

	2018			2019			2020
Cost incurred during the year	$	2,100,000		$	2,450,000		$	2,695,000
Estimated costs to complete as of year-end		4,900,000			2,450,000			0
Billings during the year		2,200,000			2,350,000			5,450,000
Cash collections during the year		1,900,000			2,300,000			5,800,000

Westgate recognizes revenue over time according to percentage of completion.

rev: 09_15_2017_QC_CS-99734

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.)

	2018			2019			2020
Cost incurred during the year	$	2,100,000		$	3,900,000		$	4,200,000
Estimated costs to complete as of year-end		4,900,000			4,300,000			0

Answer 1

Part 5
	Year 2018
	Cost incurred during the year	a	$       2,100,000
	Add: Estimated cost to complete as of year end	b	$       4,900,000
	Estimated Total cost	c	$       7,000,000
	% Completion	a/c	30%
	Revenue to be recognized	10m*30%	$       3,000,000
	Less: Cost incurred		$       2,100,000
	Gross Profit to be recognized		$           900,000
	Year 2019
	Cost incurred during the year (2100000+3900000)	A	$       6,000,000
	Add: Estimated cost to complete as of year end		$       4,300,000
	Estimated Total cost	B	$     10,300,000
	% Completion	A/B	58.25%
	Revenue to be recognized	10m*58.25%	$       5,825,243
	Already recognized till 2018		$       3,000,000
	To be recognized in 2019		$       2,825,243
	Less: Cost incurred		$       4,200,000
	Gross Profit/Loss to be recognized		$      -1,374,757
	Year 2020
	Cost incurred during the year	A	$     10,200,000
	Add: Estimated cost to complete as of year end		$                       -
	Estimated Total cost	B	$     10,200,000
	% Completion	A/B	100.00%
	Revenue to be recognized	10m*100%	$     10,000,000
	Already recognized till 2019		$       5,825,243
	To be recognized in 2020		$       4,174,757
	Less: Cost incurred		$       3,900,000
	Gross Profit to be recognized		$           274,757