Question

# In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa...

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 \$ 2,400,000 \$ 3,600,000 \$ 2,200,000 Estimated costs to complete as of year-end 5,600,000 2,000,000 0 Billings during the year 2,000,000 4,000,000 4,000,000 Cash collections during the year 1,800,000 3,600,000 4,600,000

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.)

2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred).
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 balance sheet for 2021 and 2022 showing any items related to the contract. (Do not round intermediate calculations.)

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.)

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. (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.)

 (1) Particulars 2,021 2,022 2,023 Billing during the year (cumulative) 20,00,000 60,00,000 1,00,00,000 Revenue (10000000 x 30% or 45% or 25%) 30,00,000 45,00,000 25,00,000 Cost incurred 24,00,000 36,00,000 22,00,000 Gross Profit 6,00,000 9,00,000 3,00,000 *It is assumed estimated revenue \$ 1 crores Working Notes: 2,021 2,022 2,023 (i) Cost incurred (cumulative) (a) 24,00,000 60,00,000 82,00,000 Estimated cost to be complete (b) 56,00,000 20,00,000 - Total estimated cost at the end (c ) 80,00,000 80,00,000 82,00,000 Percentage of completion (a/c) 30.00% 75.00% 100.00% (2a) 2021 Cost 24,00,000 Gross Profit 6,00,000 Revenue 30,00,000 (2b) 2022 Cost 36,00,000 Gross Profit 9,00,000 Revenue 45,00,000 (2c) 2023 Cost 22,00,000 Gross Profit 3,00,000 Revenue 25,00,000

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