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:

Westgate recognizes revenue over time according to percentage of completion.

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.)

Answer 1

Solution 2018 2,542,000 2019 3,810,000 2020 3210,000 Cost incurred during th Cumulativecost incurred upto end of year Estimated costs to complete as of year-end Total estimated cost $2,542,000 $6,352,000$9,562,000 5,658,000 8,200,000 3,110,000 9,462,000 9,562,000 % completed as of year-end Cumulativerevenue recognised as of year-end Revenue recognised during the year Cost recognised during the vear Gross profit 67.13% $6,713,168 3,613 168 3,810,000 ($196,832) 31.00% 3,100,000 3,100,000 2,542,000 558,000 100.00% 10,000,000 3,286,832 3210,000 76,832 2018 2019 2020 $3,613,168 ($196,832) $3,100,000 $3,286,832 Revenue $558,000 $76,832 Gross Profit (loss)

Note: There is discrepancy in the data provided in the problem, two data tables are provided in the question which do not match with each other e.g. Cost incurred during the year is different in both the data tables. I have used the 2nd table given in the problem to solve the problem.