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: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2021 $2,400,000 5,600,000 2,000,000 1,800,000 2022 $3,600,000 2,000,000 4,000,000 3,600,000 2023 $2,200,000 0 4,000,000 4,600,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. 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). 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract. 4. 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. 2021 2022 2023 Cost incurred during the year $ 2,400,000 $3,800,000 $3,200,000 Estimated costs to complete as of year-end 5,600,000 3,100,000 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. 2021 $ 2,400,000 5,600,000 Cost incurred during the year Estimated costs to complete as of year-end 2022 $3,800,000 4,100,000 2023 $3,900,000

Answer 1

Camlin Page 10 Dalo Reg 1 Label and 2021 2022 10000000 10000000 c.2001 2023 10000 2012 122001 contract price - actual cost todake 1360 + 2400 13600 2400 (2000) - estimated costo (5600) . complete estimated Gift 2000 2000 1,800 I Rega 9021 2022 2023 a # contructiorinprocon 2400_101:3600 2 200__ to cash etc - 2400"! 3600_ 2200. (to record con bructioncast) E in Accounts receivable 2000 E to ballingon contruction - e to record pwynebilling 4000 4000 2000_ 4000 hu 11:" 4000 E # cash 1800 36001. accounts receivable 1800 3600 C to record lasn receivable) Bilder 4600 4600 4 con balcon in processo Sele co _1800__ contruction expe 2400 3600 2200 Common rence contruction rence. 0 2400 NL 3600 40000

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