Question

Required information [The following information applies to the questions displayed below.] 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 2-a. In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred).

Answer 1

	Percentage completion method	2018	2019	2020
	Cost incurred in till previous year	0	2490000	6474000
ADD	Cost incurred during the year	2490000	3984000	2008600
	Total cost incurred till date	2490000	6474000	8482600
ADD	Estimated cost to be incurred	5810000	1826000	0
	Total estimated cost to be incurred	8300000	8300000	8482600
	Percentage of completion (A)	30%	78.00%	100%
	(cost incurred till date /total estimated cost )
	Total revenue (B)	10000000	10000000	10000000
	Total revenue recognized (A *B)	3000000	7800000	10000000
Less	Revenue recognized in previous year	0	3000000	7800000
	revenue recognized in current year	3000000	4800000	2200000
		2018	2019	2020
	Revenue	3000000	4800000	2200000
Less	Cost incurred	2490000	3984000	2008600
	Gross profit	510000	816000	191400