Question

Required information (The following information applies to the questions displayed below.) 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: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2021 $2,016,000 5,184,000 2,180,000 1,890,000 2022 $2,808,000 2,376,000 2,644,000 2,500,000 2023 $ 2,613,600 0 5, 176,000 5,610,000 Westgate recognizes revenue over time according to percentage of completion. 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.) Costs incurred during the year Estimated costs to complete as of year-end 2021 $2,016,000 5,184,000 2022 $3,890,000 3,190,000 2023 $3,290,000 0 2021 2022 2023 Revenue Gross profit (loss)

Answer 1

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	2021	2022	2023
Contract Price (a)	10000000	10000000	10000000
Less: Estimated Cost
Costs incurred to date	2016000	5906000	9196000
Estimated costs to complete	5184000	3190000	0
Estimated total costs (b)	7200000	9096000	9196000
Estimated gross profit (a-b)	2800000	904000	804000
% of completion	28.00%	64.93%	100.00%
(Cost incurred till date / Total costs)
Gross profit earned	784000	586964	804000
Less: Gross profit earned in previous year	0	784000	784000
Gross profit recognised	784000	-197036	20000
Construction Revenue	2800000	6492964	10000000
Construction Revenue to be recognised over time	2800000	6492964	7200000