Question

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 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.)

Answer 1

Computation of % Completion & Gross Profit
		2018	2019	2020
	Contract price	$10,000,000	$10,000,000	$10,000,000
	Estimated cost:
	Cost To date	$2,490,000	$6,474,000	$8,482,600
	Estimated costs To Complete	$5,810,000	$1,826,000
	Estimated Total costs	$8,300,000	$8,300,000	$8,482,600
	% Completed	30%	78%	100%
	Estimated Total gross profit	$1,700,000	$1,700,000	$1,517,400
	Total Gross profit To be Recognized	$510,000	$1,326,000	$1,517,400
	Gross profit Recognized in Previous years	$0	$510,000	$1,326,000
	Gross profit Recognized during the current year	$510,000	$816,000	$191,400