Question

# Required information [The following information applies to the questions displayed below.]    In 2018, the Westgate...

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 \$ 2,580,000 \$ 4,042,000 \$ 2,175,800 Estimated costs to complete as of year-end 6,020,000 1,978,000 0 Billings during the year 2,060,000 4,562,000 3,378,000 Cash collections during the year 1,830,000 4,200,000 3,970,000

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 \$ 2,580,000 \$ 3,830,000 \$ 3,230,000 Estimated costs to complete as of year-end 6,020,000 3,130,000 0

Calculation of Revenue and Gross Profit :-

 Particulars 2018 2019 2020 Cost Incurred Each Year (a) 2580000 4042000 2175800 Cost Incurred to Date (b) 2580000 6622000 8797800 Estimated Costs (c) 6020000 1978000 Total Estimated Costs (d) = (b+c) 8600000 8600000 8797800 % Completed (e) = (b/d)*100 30% 77% 100% Revenue (f) (\$10000000*e)-Last year Revenue 3000000 4700000 2300000 Expenses (g) 2580000 4042000 2175800 Gross Profit (h) = (f-g) 420000 658000 124200

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