Question

Required information IThe following information apples 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: 2021 $2,523,e00 6,177,e00 2,070, eee 1,835,eee Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2022 2023 $3,177,e00 1,80e,e0e 3,630,eee 3,40e, eee $1,980,eee e 4,300,000 4,765, eee Westgate recognizes revenue over time according to percentage of completion. 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract. (Do not round internmediate calculations.) Balance Sheet (Partial) 2021 2022 Current assets Accounts receivable Construction in progress Less Billings Costs and profit in excess of billings 0 0 Current iabilities

Answer 1

Answer 1
Year	2021	2022	2023
Cost incurred during the year	$          2,523,000	$          3,177,000	$          1,980,000
Cumulative cost incurred at end of year	$          2,523,000	$          5,700,000	$          7,680,000
Cumulative cost incurred at end of year	$          2,523,000	$          5,700,000	$          7,680,000
Add: Estimated costs to complete as of year-end	$          6,177,000	$          1,800,000	$                           0
Total estimated cost	$          8,700,000	$          7,500,000	$          7,680,000
Percentage of completion (cumulative cost incurred at end of year / Total estimated cost)	29.00%	76.00%	100.00%
Revenue recognized till the date (10000000 * percentage of completion)	$          2,900,000	$          7,600,000	$        10,000,000
Less: Revenue recognized up to earlier year	$                           0	$          2,900,000	$          7,600,000
Revenue recognized in current year	$          2,900,000	$          4,700,000	$          2,400,000
Revenue recognized in current year	$          2,900,000	$          4,700,000	$          2,400,000
Less: cost incurred during the year	$          2,523,000	$          3,177,000	$          1,980,000
Gross Profit (Loss)	$              377,000	$          1,523,000	$              420,000

Date	General Journal	Debit	Credit
2021	Construction in progress	2,523,000
	Various Accounts		2,523,000
	(To record cost incurred in Progress.)
2021	Accounts receivable	2,070,000
	Billings on construction contract		2,070,000
	(To record Billings to Customer.)
2021	Cash	1,835,000
	Accounts receivable		1,835,000
	(To record cash collected from customer.)
2021	Construction in progress	377,000
	Cost of construction	2,523,000
	Construction Revenue		2,900,000
	(To record recognize Revenue.)
2022	Construction in progress	3,177,000
	Various Accounts		3,177,000
	(To record cost incurred in Progress.)
2022	Accounts receivable	3,630,000
	Billings on construction contract		3,630,000
	(To record Billings to Customer.)
2022	Cash	3,400,000
	Accounts receivable		3,400,000
	(To record cash collected from customer.)
2022	Construction in progress	1,523,000
	Cost of construction	3,177,000
	Construction Revenue		4,700,000
	(To record recognize Revenue.)
2023	Construction in progress	1,980,000
	Various Accounts		1,980,000
	(To record cost incurred in Progress.)
2023	Accounts receivable	4,300,000
	Billings on construction contract		4,300,000
	(To record Billings to Customer.)
2023	Cash	4,765,000
	Accounts receivable		4,765,000
	(To record cash collected from customer.)
2023	Construction in progress	420,000
	Cost of construction	1,980,000
	Construction Revenue		2,400,000
	(To record recognize Revenue.)
2023	Billings on construction contract	10,000,000
	Construction in progress		10,000,000
	(To record completion of contract.)

Calculation	2021	2022
Beginning Accounts receivable		235,000
Billings	2,070,000	3,630,000
Less: Collections	1,835,000	3,400,000
Accounts receivable	235,000	465,000

Partial Balance sheet	2021		2022
Current assets
Accounts receivable		235,000		465,000
Construction in progress	$ 2,900,000		$   7,600,000
Less: Billings (for 2022 = 2070000 + 3630000)	2,070,000		5,700,000
Cost and profit in Excess of Billings		830,000		1,900,000