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: 2023 $2,424, 400 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2021 $2,204,000 5,396,000 2,140,000 1,870,000 2022 $3,192,000 2,204,000 3,256,000 3,200,000 4,604,000 4,930,000 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). Complete this question by entering your answers in the tabs below.

Answer 1

Answer 1
Year	2021	2022	2023
Cost incurred during the year	$          2,204,000	$          3,192,000	$          2,424,400
Cumulative cost incurred at end of year	$          2,204,000	$          5,396,000	$          7,820,400
Cumulative cost incurred at end of year	$          2,204,000	$          5,396,000	$          7,820,400
Add: Estimated costs to complete as of year-end	$          5,396,000	$          2,204,000	$                           0
Total estimated cost	$          7,600,000	$          7,600,000	$          7,820,400
Percentage of completion (cumulative cost incurred at end of year / Total estimated cost)	29.00%	71.00%	100.00%
Revenue recognized till the date (10000000 * percentage of completion)	$          2,900,000	$          7,100,000	$        10,000,000
Less: Revenue recognized up to earlier year	$                           0	$          2,900,000	$          7,100,000
Revenue recognized in current year	$          2,900,000	$          4,200,000	$          2,900,000
Revenue recognized in current year	$          2,900,000	$          4,200,000	$          2,900,000
Less: cost incurred during the year	$          2,204,000	$          3,192,000	$          2,424,400
Gross Profit (Loss)	$              696,000	$          1,008,000	$              475,600
Your Answer
Year	2021	2022	2023
Revenue	$          2,900,000	$          4,200,000	$          2,900,000
Gross Profit (Loss)	$              696,000	$          1,008,000	$              475,600

Date	General Journal	Debit	Credit
2021	Construction in progress	$          2,204,000
	Various Accounts		$       2,204,000
	(To record cost incurred in Progress.)
2021	Accounts receivable	$          2,140,000
	Billings on construction contract		$       2,140,000
	(To record Billings to Customer.)
2021	Cash	$          1,870,000
	Accounts receivable		$       1,870,000
	(To record cash collected from customer.)
2021	Construction in progress	$              696,000
	Cost of construction	$          2,204,000
	Construction Revenue		$       2,900,000
	(To record recognize Revenue.)
2022	Construction in progress	$          3,192,000
	Various Accounts		$       3,192,000
	(To record cost incurred in Progress.)
2022	Accounts receivable	$          3,256,000
	Billings on construction contract		$       3,256,000
	(To record Billings to Customer.)
2022	Cash	$          3,200,000
	Accounts receivable		$       3,200,000
	(To record cash collected from customer.)
2022	Construction in progress	$          1,008,000
	Cost of construction	$          3,192,000
	Construction Revenue		$       4,200,000
	(To record recognize Revenue.)
2023	Construction in progress	$          2,424,400
	Various Accounts		$       2,424,400
	(To record cost incurred in Progress.)
2023	Accounts receivable	$          4,604,000
	Billings on construction contract		$       4,604,000
	(To record Billings to Customer.)
2023	Cash	$          4,930,000
	Accounts receivable		$       4,930,000
	(To record cash collected from customer.)
2023	Construction in progress	$              475,600
	Cost of construction	$          2,424,400
	Construction Revenue		$       2,900,000
	(To record recognize Revenue.)
2023	Billings on construction contract	$        10,000,000
	Construction in progress		$     10,000,000
	(To record completion of contract.)