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 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.) 2018 2019 2020 Cost incurred during the year $ 2,490,000 $ 3,815,000 $ 3,215,000 Estimated costs to complete as of year-end 5,810,000 3,115,000 0

Answer 1

Computation of % Completion & Gross Profit & Revenue
		2018	2019	2020
	Contract price	$10,000,000	$10,000,000	$10,000,000
	Estimated cost:
	Cost To date	$2,490,000	$6,305,000	$9,520,000
	Estimated costs To Complete	$5,810,000	$3,115,000
	Estimated Total costs	$8,300,000	$9,420,000	$9,520,000
	% Completed	30%	67%	100%
	Estimated Total gross profit	$1,700,000	$580,000	$480,000
	Total Gross profit To be Recognized	$510,000	$388,206	$480,000
	Gross profit Recognized in Previous years	$0	$510,000	$388,206
	Gross profit Recognized during the current year	$510,000	-$121,794	$91,794
	Revenue to be recognized	$2,030,000	$4,444,000	$3,526,000