Question

Required information [The following information applies to the questions displayed below] Pert 3 of 5 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: polnts 2018 2019 2020 $2,072,000 5,328, 000 2,160,000 1,880,000 Cost incurred during the year Estimated costs to complete as of year-end Billings during the ye ar Cash collections during the year $2,738,000 $2,849,000 2,590,000 2,650,000 2,700,000 0 5,190,000 5,420,000 Westgate recognizes revenue over time according to percentage of completion. 3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract. (Do not round intermediate calculations.) Answer is complete but not entirely correct. Balance Sheet (Partial) 2018 2019 Current assets: $728,000 Accounts receivable 280,000 Construction in progress 2,800,000 6,728.900 Less: Billings (2,160,000) (728,000) 6,000,900 Costs and profit in excess of billings 640.000 Current liabilities:

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Contract % Completion Part 1: Amount of Gross profit recognized each year Year 2018 Cost incurred during the year Add: Estimated cost to complete as of year end Estimated Total cost $ $ $ 2,072,000 5,328,000 7,400,000 % Completion 28.00% 10m*28% Revenue to be recognized Less: Cost incurred Gross Profit to be recognized $ $ $ 2,800,000 2,072,000 728,000 Year 2019 Cost incurred during the year Add: Estimated cost to complete as of year end Estimated Total cost $ $ $ 4,810,000 2,590,000 7,400,000 % Completion A/B 65.00% 10m*65% Revenue to be recognized Already recognized till 2018 To be recognized in 2019 Less: Cost incurred Gross Profit to be recognized $ $ $ $ $ 6,500,000 2,800,000 3,700,000 2,738,000 962,000 Year 2020 $ 7,659,000 Cost incurred during the year Add: Estimated cost to complete as of year end Estimated Total cost B $ 7,659,000 % Completion 100.00% 10m*100% Revenue to be recognized Already recognized till 2019 To be recognized in 2020 Less: Cost incurred Gross Profit to be recognized $ $ $ $ $ 10,000,000 6,500,000 3,500,000 2,849,000 651,000 Part 2a: 2018 Journal entries: S No Account Debit Credit $ 2,072,000 $ 2,072,000 $ 2,160,000 $ 2,160,000 Construction in Progress Various Accounts (record construction cost) Accounts Receivable Billing on construction contracts (record progress billing) Cash Accounts Receivable (record collection) Construction in Progress Cost of Construction Revenue from long term contracts (record gross profit) $ 1,880,000 $ 1,880,000 $ $ 728,000 2,072,000 Cost 2,800,000 Revenue recognized $

Part 2b: 2019 Journal entries: S No Account Debit Credit $ 2,738,000 $ 2,738,000 $ 2,650,000 $ 2,650,000 Construction in Progress Various Accounts (record construction cost) Accounts Receivable Billing on construction contracts (record progress billing) Cash Accounts Receivable (record collection) Construction in Progress Cost of Construction Revenue from long term contracts (record gross profit) $ 2,700,000 $ 2,700,000 $ $ 962,000 2,738,000 Cost $ 3,700,000 Revenue recognized Part 2c: 2020 Journal entries: S No Account Debit Credit $ 2,849,000 $ 2,849,000 $ 5,190,000 $ 5,190,000 Construction in Progress Various Accounts (record construction cost) Accounts Receivable Billing on construction contracts (record progress billing) Cash Accounts Receivable (record collection) Construction in Progress Cost of Construction Revenue from long term contracts (record gross profit) $ 5,420,000 $ 5,420,000 $ $ 651,000 2,849,000 Cost 3,500,000 Revenue recognized $ Part 3 2018 2019 280,000 $ 230,000 Current Assets: Accounts Receivable Construction in Progress Less Billings Costs and profit in excess of billing Current Liabilities: Various Accounts/Accounts Payable $ $ 2,800,000 2,160,000 6,500,000 4,810,000 $ 640,000 $ 1,690,000 $ 2,072,000 $ 4,810,000