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The following information applies to the questions displayed below.] In 2018, the Westgate Construction Company entered...

The following information applies to the questions displayed below.]

In 2018, 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 2020. Information related to the contract is as follows:

2018 2019 2020
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.


rev: 09_15_2017_QC_CS-99734

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. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)

2018 2019 2020
Cost incurred during the year $ 2,490,000 $ 3,815,000 $ 3,215,000
Estimated costs to complete as of year-end 5,810,000 3,115,000 0

I need to know the Revenue and Gross Profit for each year-

2018 2019 2020

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Answer #1

Solution 4:

Computation of % of completion, revenue recognition and Gross Profit - Westgate Construction Company
Year Actual cost incurred (A) Total cost incurred till date (B) Total estimated Cost ( C ) % of completion (D) (B/C) Contract Price
(E)
Total Revenue to be recoganized (F) (E * D) Revenue for current period (G) Gross Profit (H)
2018 $2,490,000 $2,490,000 $8,300,000 30.00% $10,000,000 $3,000,000 $3,000,000 $510,000
2019 $3,815,000 $6,305,000 $9,420,000 66.93% $10,000,000 $6,693,206 $3,693,206 -$121,794
2020 $3,215,000 $9,520,000 $9,520,000 100.00% $10,000,000 $10,000,000 $3,306,794 $91,794
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