Required information [The following information applies to the questions display

Question

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 $ 2,490,000 $ 3,984,000 $ 2,008,600 Estimated costs to complete as of year-end 5,810,000 1,826,000 0 Billings during the year 2,030,000 4,444,000 3,526,000 Cash collections during the year 1,815,000 3,900,000 4,285,000 Westgate recognizes revenue over time according to percentage of completion. rev: 09_15_2017_QC_CS-99734 2-a. In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred).

Explanation / Answer

Percentage completion method 2018 2019 2020 Cost incurred in till previous year 0 2490000 6474000 ADD Cost incurred during the year 2490000 3984000 2008600 Total cost incurred till date 2490000 6474000 8482600 ADD Estimated cost to be incurred 5810000 1826000 0 Total estimated cost to be incurred 8300000 8300000 8482600 Percentage of completion (A) 30% 78.00% 100% (cost incurred till date /total estimated cost ) Total revenue (B) 10000000 10000000 10000000 Total revenue recognized (A *B) 3000000 7800000 10000000 Less Revenue recognized in previous year 0 3000000 7800000 revenue recognized in current year 3000000 4800000 2200000 2018 2019 2020 Revenue 3000000 4800000 2200000 Less Cost incurred 2490000 3984000 2008600 Gross profit 510000 816000 191400

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