In 2013, the Westgate Construction Company entered into a contract to construct

Question

In 2013, 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 2015. Information related to the contract is as follows:

  

  

  

Calculate the amount of gross profit (loss) to be recognized in each of the three years.

      

In the journal below, complete the necessary journal entries for the year 2013 (credit various accounts for construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

        

In the journal below, complete the necessary journal entries for the year 2014 (credit various accounts for construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

       

In the journal below, complete the necessary journal entries for the year 2015 (credit various accounts for construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

        

Complete the information required below to prepare a partial balance sheet for 2013 and 2014 showing any items related to the contract.

      

Calculate the amount of gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information.

   

   

  

Calculate the amount of gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information.

   

   

In 2013, 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 2015. Information related to the contract is as follows:

Explanation / Answer

Gross Profit to be recognised in 2013 is 0

Gross Profit to be recognised in 2014 is 0

Gross Profit to be recognised in 2015 = Amount received - eastimated cost

= 10,50,000 - 1875000- 3375000 -2475000

= 2325000

S.no Particluars Dr   Cr 2013 1 Work in progress      1,875,000.00 To accounts payable      1,875,000.00 2 Accounts Receivable      1,500,000.00 To Billings      1,500,000.00 3 Cash      1,350,000.00 To Accounts Receivable      1,350,000.00 2014 4 Work in progress      3,375,000.00 To accounts payable      3,375,000.00 5 Accounts Receivable      3,750,000.00 To Billings      3,750,000.00 6 Cash      3,100,000.00 To Accounts Receivable      3,100,000.00 2015 7 Work in progress      2,475,000.00 To accounts payable      2,475,000.00 8 Accounts Receivable      4,750,000.00 To Billings      4,750,000.00 9 Cash      5,600,000.00 To Accounts Receivable      5,600,000.00 10 Billings    10,000,000.00 To Construction contract revenue    10,000,000.00 11 Cost of construction      7,725,000.00 To Work in progress      7,725,000.00

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