Question

Required information (The following information applies 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: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2021 $ 2,044,000 5, 256,000 2,170,000 1,885,000 2022 2023 $2,628,000 $2,890, 800 2,628,000 2,502,0005 ,328,000 2,600,0005,515,000 Westgate recognizes revenue over time according to percentage of completion. 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.)

Answer 1

Answer:

2021 $ 2023 5,929,000 3,285,000 9,214,000 a. Cost incurred in till previous year b. Add: Cost incurred during the year C. Total cost incurred till date d. Add: Estimated cost to be incurred e. Total estimated cost to be incurred f. Percentage of completion (b) = (e) g. Total revenue h. Total revenue recognized (f) x (g) i. Less: Revenue recognized in previous year Revenue recognized in current year k. Gross profit (j) - (b) 2,044,000 2,044,000 5,256,000 7,300,000 28% 10,000,000 2,800,000 2022 $ 2,044,000 $ 3,885,000 5,929,000 3,185,000 9,114,000 65% 10,000,000 6,505,376 2,800,000 3,705,376 (179,624) 9,214,000 100% 10,000,000 10,000,000 6,505,376 3,494,624 209,624 2,800,000 756,000