FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 $2,581,000 $2,347,000 $3,049,200
Estimated costs to complete as of year-end 6,319,000 2,772,000 0
Billings during the year 2,090,000 2,838,000 5,072,000
Cash collections during the year 1,845,000 2,900,000 5,255,000
Westgate recognizes revenue over time according to percentage of completion.
- 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 intermediate calculations.)
Balance Sheet (Partial) 2021 2022
Current assets: _________ ____________ _________ _________
_____________________________ __________ ___________ _________ __________
_____________________________ ----------------- ------------------ ---------------- -----------------
_____________________________ __________ ___________ __________ __________
_____________________________ __________ __________0_ __________ ________0
Current liabilities: __________ ____________ __________ __________
_____________________________ __________ ____________ __________ __________
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- In 2021, the Kokosing Construction Company of Columbus, Ohio entered into a contract to construct a road for Franklin County for $20,000,000. The road was completed in 2023. Information pertaining to the contract is provided below: 2021 2022 2023 Costs incurred during the year Estimated costs to complete as of year end Billings during the year Cash Collections during the year $4,800,000 $7,200,000 $4,400,000 11,200,000 4,000,000 4,000,000 8,000,000 8,000,000 3,600,000 7,200,000 9,200,000 Kokosing recognizes revenue over time according to percentage of completion. Required: 1. Compute the amount of revenue and gross profit to be recognized in 2021, 2022, and 2023. 2. Prepare the necessary journal entries for 2021 and 2022. Use the following accounts for your journal entries - "Construction in Progress", "Cash, Materials etc.", "Accounts Receivable", "Billings on Construction in Progress", "Cash", "Cost of Construction", and "Revenue from Long-term contracts". 3. Prepare a partial…arrow_forwardAssume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,860,000. The project began in 2021 and was completed in 2022 Data relating to the contract are summarized below: 2021 $ 372,000 $1,899,00e 1,488,eee 524,000 318,eee 2022 Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 2,336,800 2,542, 000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time occording to percentege of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 ssuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented ot the end of 2021 assuming Nortel recognizes revenue over time according to percentege of completion. 4. Prepare a partial…arrow_forward5) 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 $ 2,100,000 $ 2,450,000 $ 2,695,000 Estimated costs to complete as of year-end 4,900,000 2,450,000 0 Billings during the year 2,200,000 2,350,000 5,450,000 Cash collections during the year 1,900,000 2,300,000 5,800,000 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.) 2021 2022 2023 Costs incurred…arrow_forward
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