Homework Answers
| 1 | Percentage of completion=Cost incurred during the year/Total estimated cost | |||||
| Revenue to be recognized=Contract price*Percenatge of completion | ||||||
| Gross profit/(loss) to be recognized=Estimated gross profit/(Loss) *percentage of completion | ||||||
| Estimated gross profit/(loss)=Contract price-Total estimated costs | ||||||
| 2021 | 2022 | 2023 | ||||
| a) Contract price | 10000000 | 10000000 | 10000000 | |||
| b) Actual cost to date | 3096000 | 6966000 | 8763400 | |||
| (3096000+3870000) | (6966000+1797400) | |||||
| c) Estimated costs to complete | 5504000 | 1634000 | 0 | |||
| d) Total estimated costs (b)+© | 8600000 | 8600000 | 8763400 | |||
| e) Estimated gross profit/(loss) (a)-(d) | 1400000 | 1400000 | 1236600 | |||
| f) Percentage of completion (b)/(d) | 36.00% | 81.00% | 100.00% | |||
| g) Revenue to be recognized (a)*(f) | 3600000 | 8100000 | 10000000 | |||
| Less: Revenue already recognized | 0 | 3600000 | 8100000 | |||
| (3600000+4500000) | ||||||
| Revenue to be recognized in the current year | 3600000 | 4500000 | 1900000 | |||
| h) Gross profit/(loss) to be recognized €*(f) | 504000 | 1134000 | 1236600 | |||
| Less:Gross profit/(loss) already recognized | 0 | 504000 | 1134000 | |||
| (504000+630000) | ||||||
| Gross profit/(loss) to be recognized in the current year | 504000 | 630000 | 102600 | |||
| Journal entries: | ||||||
| 2-a. | Date | Account Titles and Explanation | Debit | Credit | ||
| 2021 | Construction in progress | 3096000 | ||||
| Various accounts | 3096000 | |||||
| (Construction cost incurred) | ||||||
| Accounts receivable | 2600000 | |||||
| Billings on construction contract | 2600000 | |||||
| (Billings during the year) | ||||||
| Cash | 2400000 | |||||
| Accounts receivable | 2400000 | |||||
| (Cash collections during the year) | ||||||
| Construction in progress | 504000 | |||||
| Cost of construction | 3096000 | |||||
| Revenue fronm long-term contracts | 3600000 | |||||
| (Gross profit and revenue recognized) |
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Problem 6-11 (Algo) Long-term contract; revenue recognition upon completion (LO6-9) In 2021, the Westgate Construction Company...
Problem 6-11 (Algo) Long-term contract; revenue recognition upon completion (LO6-9] In 2021, the Westgate Construction Company...
Problem 6-11 (Algo) Long-term contract; revenue recognition upon completion (LO6-9] 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 $1,976,000 5, 624,000 1,600,000 1,400,000 2022 $3,420,000 2,204,000 3,796,000 3,200,000 2023 $2,424, 400 0...
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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 $2,200,000 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 4,000,000 4,600,000 Assume that Westgate Construction's contract with Santa Clara County does not...
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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 $1,797,400 points Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2021 $3,096,000 5,504,000 2,600,000 2,400,000 2022 $3,870,000 1,634,000 4,366,000 4,200,000 8 0247:45 3,034,000 3,400,000 Skipped Assume that Westgate Construction's contract with Santa...
Exercise 6-21 (Algo) Long-term contract; revenue recognition over time; loss projected on entire project [LO6-9] On...
Exercise 6-21 (Algo) Long-term contract; revenue recognition over time; loss projected on entire project [LO6-9] On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,300,000. During 2021, costs of $2,100,000 were incurred with estimated costs of $4,100,000 yet to be incurred. Billings of $2,600,000 were sent, and cash collected was $2,350,000. In 2022, costs incurred were $2,600,000 with remaining costs estimated to be $3,750,000. 2022 billings were $2,850,000...
Exercise 6-21 (Algo) Long-term contract; revenue recognition over time; loss projected on entire project (LO6-9) On...
Exercise 6-21 (Algo) Long-term contract; revenue recognition over time; loss projected on entire project (LO6-9) On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,270,000. During 2021, costs of $2,090,000 were incurred with estimated costs of $4,090,000 yet to be incurred. Billings of $2,590,000 were sent, and cash collected was $2,340,000. points eBook In 2022, costs incurred were $2,590,000 with remaining costs estimated to be $3,735,000. 2022 billings...
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...
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
$
2,975,000
$
3,825,000
$
1,870,000
Estimated costs to complete as of year-end
5,525,000
1,700,000
0
Billings during the year
2,500,000
4,300,000
3,200,000
Cash collections during the year
2,300,000
4,100,000
3,600,000
Assume that Westgate Construction’s contract with Santa...
Exercise 6-20 (Algo) Long-term contract; revenue recognition over time vs. upon project completion [LO6-9] On June...
Exercise 6-20 (Algo) Long-term contract; revenue recognition over time vs. upon project completion [LO6-9] On June 15, 2021, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $390 million. The expected completion date is April 1, 2023, just in time for the 2023 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): Costs incurred during the year Estimated...
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a...
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,240,000. During 2021, costs of $2,080,000 were incurred with estimated costs of $4,080,000 yet to be incurred. Billings of $2,580,000 were sent, and cash collected was $2.330,000. In 2022, costs incurred were $2,580,000 with remaining costs estimated to be $3,720,000. 2022 billings were $2.830,000 and $2,555,000 cash was collected. The project was completed in 2023 after additional costs of...
Exercise 6-22 (Algo) Long-term contract; revenue recognition upon project completion; loss projected on entire project [LO6-8,...
Exercise 6-22 (Algo) Long-term contract; revenue recognition upon project completion; loss projected on entire project [LO6-8, 6-9] On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,125,000. During 2021, costs of $2,050,000 were incurred, with estimated costs of $4,050,000 yet to be incurred. Billings of $2,560,000 were sent, and cash collected was $2,300,000. In 2022, costs incurred were $2,560,000 with remaining costs estimated to be $3,675,000. 2022 billings...
6 Problem 5-11 Long-term contract; revenue recognition upon completion [LO5-9) In 2018, the Westgate Construction Company...
6 Problem 5-11 Long-term contract; revenue recognition upon completion [LO5-9) In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $30,000000 The road was completed in 2020 Information related to the contract is as folows Billings during the year Cash cellections during the year 1,800,0003,690,84,600,0 SeferencesWestgate Construction uses the completed contract method of accounting for long-term construction contrects Required: 1. Calculate the amount of revenue and gross profit (oss) to be...
Problem 6-11 (Algo) Long-term contract; revenue recognition upon completion (LO6-9] 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 $1,976,000 5, 624,000 1,600,000 1,400,000 2022 $3,420,000 2,204,000 3,796,000 3,200,000 2023 $2,424, 400 0...
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 $2,200,000 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 4,000,000 4,600,000 Assume that Westgate Construction's contract with Santa Clara County does not...
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 $1,797,400 points Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2021 $3,096,000 5,504,000 2,600,000 2,400,000 2022 $3,870,000 1,634,000 4,366,000 4,200,000 8 0247:45 3,034,000 3,400,000 Skipped Assume that Westgate Construction's contract with Santa...
Exercise 6-21 (Algo) Long-term contract; revenue recognition over time; loss projected on entire project [LO6-9] On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,300,000. During 2021, costs of $2,100,000 were incurred with estimated costs of $4,100,000 yet to be incurred. Billings of $2,600,000 were sent, and cash collected was $2,350,000. In 2022, costs incurred were $2,600,000 with remaining costs estimated to be $3,750,000. 2022 billings were $2,850,000...
Exercise 6-21 (Algo) Long-term contract; revenue recognition over time; loss projected on entire project (LO6-9) On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,270,000. During 2021, costs of $2,090,000 were incurred with estimated costs of $4,090,000 yet to be incurred. Billings of $2,590,000 were sent, and cash collected was $2,340,000. points eBook In 2022, costs incurred were $2,590,000 with remaining costs estimated to be $3,735,000. 2022 billings...
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
$
2,975,000
$
3,825,000
$
1,870,000
Estimated costs to complete as of year-end
5,525,000
1,700,000
0
Billings during the year
2,500,000
4,300,000
3,200,000
Cash collections during the year
2,300,000
4,100,000
3,600,000
Assume that Westgate Construction’s contract with Santa...
Exercise 6-20 (Algo) Long-term contract; revenue recognition over time vs. upon project completion [LO6-9] On June 15, 2021, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $390 million. The expected completion date is April 1, 2023, just in time for the 2023 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): Costs incurred during the year Estimated...
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,240,000. During 2021, costs of $2,080,000 were incurred with estimated costs of $4,080,000 yet to be incurred. Billings of $2,580,000 were sent, and cash collected was $2.330,000. In 2022, costs incurred were $2,580,000 with remaining costs estimated to be $3,720,000. 2022 billings were $2.830,000 and $2,555,000 cash was collected. The project was completed in 2023 after additional costs of...
6 Problem 5-11 Long-term contract; revenue recognition upon completion [LO5-9) In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $30,000000 The road was completed in 2020 Information related to the contract is as folows Billings during the year Cash cellections during the year 1,800,0003,690,84,600,0 SeferencesWestgate Construction uses the completed contract method of accounting for long-term construction contrects Required: 1. Calculate the amount of revenue and gross profit (oss) to be...
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