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: 2021 2022 2023 Cost incurred during the year $ 2,016,000 $ 2,808,000 $ 2,613,600 Estimated costs to complete as of year-end 5,184,000 2,376,000 0 Billings during the year 2,180,000 2,644,000 5,176,000 Cash collections during the year 1,890,000 2,500,000 5,610,000 Westgate recognizes revenue over time according to percentage of completion.

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. 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.) Costs incurred during the year Estimated costs to complete as of year-end 2021 $2,016,000 5,184,000 2022 $3,890,000 4,280,000 2023 $4,170,000 0 2021 2022 2023 Revenue Gross profit (loss)

Answer 1

Calculation of Estimated Total Cost 2021 Cost incurred During the Year $ 2,016,000 $ Cummulative cost incurred till date (a) $ 2,016,000 $ Estimated cost to complete $ 5,184,000 $ Estimated total cost (b) $ 7,200,000 $ % of Completion (a/b) 28% 2023 4,170,000 10,076,000 2022 3,890,000 $ 5,906,000 $ 4,280,000 $ 10,186,000 $ 57.98% 10,076,000 100% Calculation of Revenue and Gross profit (loss) 2021 2022 2023 Contract Value completed $ 2,800,000.00 $ 5,798,154.33 $ 10,000,000.00 (10,000,000 *28%) (10,000,000 *57.98%) (10,000,000 *100%) Less : Revenue recognised already till last year $ $ 2,800,000.00 $ 5,798,154.33 Revenue to be recognised $ 2,800,000.00 $ 2,998,154.33 $ 4,201,845.67 Cost incurred during the year $ 2,016,000.00 $ 3,890,000.00 $ 4,170,000.00 Gross Profit (loss) to be recognised $ 784,000.00 $ (891,845.67) $ 31,845.67 Note: Please Comment down for any further clarifications.