ACCOUNTING d Hw Question 3 (of 5) value 10.00 points In 2016, the Westgate Const

Question

ACCOUNTING d Hw Question 3 (of 5) value 10.00 points In 2016, the Westgate Construction Company entered into a contract to construct a road for Santa Clara 2018normaton related to the contract is as foliows: County for $10,000,000. The road was completed in 2018. Information related to the contract is as follows: 2016 2018 Cost incurred during the year Estimated costs to complete as of year-end Biings during the year Cash collections during the year 2017 $1,491,000 $3,195,000 $2,655,400 2,414,000 1,100,000 3,586,000 5,314,000 5,609,000 0 990,000 2,700,000 6,400,000 Westgate Construction uses the completed contract method of accounting for long-term construction contracts Required: . Clatoulate he amount of novenue and gross proft loss) to be recognized in each of the three years 1. Calculate the amount of revenue and (Loss amounts should be indicated with a minus sign.) Revenue Gross profit (loss) 2-a. in the journal below, complete the necessary jounal entries for the year 2016 (credit Various accounts" for construction costs incurred). (if no entry is required for a transaction/event, select

Explanation / Answer

2016 2017 2018 Total Cost incurred during the year 1491000 3195000 2655400 7341400 Estimated costs to complete as of year end 5609000 2414000 0 Billings during the year 1100000 3586000 5314000 10000000 Cash collectiond during the year 990000 2700000 6400000 10090000 1) Under completed contract method, revenue and gross profit will be recognised after the end of the contract that is in 2018 2016 2017 2018 Revenue 0 0 10000000 Cost incurred during the year 7341400 Gross Profit 2658600 2a) for 2016 Construction in process Dr 1491000                  Accounts payable Cr 1491000 ( To record actual cost incurred during the year) Contracts receivables Dr 1100000                 Progress Billings Cr 1100000 4686000 ( To record billing for the year) Cash Dr 990000              Contracts recievable Cr 990000 3) Balance Sheet ( Partial) 2016 2017 Current Assets Contracts receivable 1100000 4686000 (1100000+3586000) Construction in process 1491000 4686000 (1491000+ 3195000) Less : Progress Billings 1100000 391000 4686000 0 (1100000+3586000) Total 1491000 4686000 Current liabilities Accounts payable 1491000 4686000 4) 2016 2017 2018 Total Cost incurred during the year 2590000 3895000 3290000 9775000 Estimated costs to complete as of year end 5790000 3290000 0 Billings during the year 1100000 3586000 5314000 10000000 Cash collectiond during the year 990000 2700000 6400000 10090000 Under completed contract method, revenue and gross profit will be recognised after the end of the contract that is in 2018 2016 2017 2018 Revenue 0 0 10000000 Cost incurred during the year 9775000 Gross Profit 225000 5) 2016 2017 2018 Total Cost incurred during the year 2590000 3895000 4185000 10670000 Estimated costs to complete as of year end 5790000 3290000 0 Billings during the year 1100000 3586000 5314000 10000000 Cash collectiond during the year 990000 2700000 6400000 10090000 Under completed contract method, revenue and gross profit will be recognised after the end of the contract that is in 2018 2016 2017 2018 Revenue 0 0 10000000 Cost incurred during the year 10670000 Gross Profit/(loss) -670000

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