Question

# Required information [The following information applies to the questions displayed below.] In 2021, the Westgate Construction...

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:

 2021 2022 2023 Cost incurred during the year \$ 2,542,000 \$ 3,772,000 \$ 2,074,600 Estimated costs to complete as of year-end 5,658,000 1,886,000 0 Billings during the year 2,020,000 4,294,000 3,686,000 Cash collections during the year 1,810,000 3,800,000 4,390,000

Westgate recognizes revenue over time according to percentage of completion.

Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)

Working

 2021 2022 2023 Accumulated cost at beginning 0 2542000 6314000 Add: Cost incurred during the period 2542000 3772000 2074600 Total cost incurred till date [A] 2542000 6314000 8388600 Estimated cost to be incurred 5658000 1886000 0 Total cost to complete [B] 8200000 8200000 8388600 % of work completed [A/B] .31 or 31% .77 or 77% 100%

a)

 2021 2022 2023 Revenue to be recognized till date {Total contract revenue*% of work completed} 10000000*.31=3100000 10000000*.77= 7700000 10000000*100%=10000000 Less:Revenue recognized in prior year 0 3100000 7700000 Revenue to be recognized in current year 3100000 4600000 2300000

b)

 2021 2022 2023 Revenue recognized 3100000 4600000 2300000 less:cost incurred during the year 2542000 3772000 2074600 Gross profit 558000 828000 225400

#### Earn Coins

Coins can be redeemed for fabulous gifts.