Question

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: 2021 2022 2023 Cost incurred during the year $ 2,490,000 $ 3,984,000 $ 2,008,600 Estimated costs to complete as of year-end 5,810,000 1,826,000 0 Billings during the year 2,030,000 4,444,000 3,526,000 Cash collections during the year 1,815,000 3,900,000 4,285,000 Westgate recognizes revenue over time according to percentage of completion. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)

Please I need the correct answer for this one

Answer 1

Answer

• Requirement 1 asked

	2021	2022	2023
Revenue	$       3,000,000.00	$       4,800,000.00	$          2,200,000.00
Gross Profits (Loss)	$           510,000.00	$          816,000.00	$              191,400.00

• Workings

Working		2021	2022	2023
A	Contract Price	$     10,000,000.00	$    10,000,000.00	$        10,000,000.00
B	Cost Incurred to Date	$       2,490,000.00	$       6,474,000.00	$          8,482,600.00
C	Estimated cost yet to be incurred to complete the contract	$       5,810,000.00	$       1,826,000.00	$                                -
D = B+C	Total Cost	$       8,300,000.00	$       8,300,000.00	$          8,482,600.00
E = (B/D) x 100	% of Completion	30.00%	78.00%	100.00%
F = A x E	Revenue to date	$       3,000,000.00	$       7,800,000.00	$        10,000,000.00
G	Revenue of Previous year	$                            -	$       3,000,000.00	$          7,800,000.00
H = F - G	Net Revenue this year	$       3,000,000.00	$       4,800,000.00	$          2,200,000.00
I (=B)	Cost to date	$       2,490,000.00	$       6,474,000.00	$          8,482,600.00
J	Cost to date of previous year	$                            -	$       2,490,000.00	$          6,474,000.00
K = I - J	Net Cost for the year	$       2,490,000.00	$       3,984,000.00	$          2,008,600.00
L = H - K	Gross Profits	$           510,000.00	$          816,000.00	$              191,400.00