FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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7) 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 | $ | 3,344,000 | $ | 3,960,000 | $ | 1,645,600 | |||||
| Estimated costs to complete as of year-end | 5,456,000 | 1,496,000 | 0 | ||||||||
| Billings during the year | 2,800,000 | 4,504,000 | 2,696,000 | ||||||||
| Cash collections during the year | 2,600,000 | 4,400,000 | 3,000,000 | ||||||||
Assume that Westgate Construction’s contract with Santa Clara County does not qualify for revenue recognition over time.
Required:
1. Calculate the amount of revenue and gross
2-a. In the journal below, complete the necessary
2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs incurred).
2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs incurred).
3. Complete the information required below to prepare a partial
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.
| 2021 | 2022 | 2023 | |||||||||
| Cost incurred during the year | $ | 2,480,000 | $ | 3,840,000 | $ | 3,280,000 | |||||
| Estimated costs to complete as of year-end | 5,680,000 | 3,180,000 | 0 | ||||||||
5. 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.
| 2021 | 2022 | 2023 | |||||||||
| Cost incurred during the year | $ | 2,480,000 | $ | 3,840,000 | $ | 4,020,000 | |||||
| Estimated costs to complete as of year-end | 5,680,000 | 4,180,000 | 0 | ||||||||
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