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 2020 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2019 $2,072,000 $2,738,000 $2,849,000 2,590,000 2,650,0e0 2,700,000 5,328,000 2,160,0e0 1,880,0e0 5,190,0e0 5,420,000 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.) 2019 $2,072,000 $3,880,000 $3,280,000 2018 2020 Cost incurred during the year Estimated costs to complete as of year-end 5, 328,000 3,180,000 2018 2019 2020 Revenue Gross profit (loss) 2,800,000 728,000

Explanation / Answer

Ans. 2018 2019 2020 Revenue 2800000 3700000 3500000 Gross Profit (loss) 728000 962000 651000 *Calculation of Actual cost: Actual cost 2018 Cost incurred 2072000 2072000 2019 (cost incurred of 2018+2019) 2072000 + 2738000 4810000 2020 (Cost incurred of 2018+2019+2020) 2072000 + 2738000 + 2849000 7659000 *Calculation of Total estimated cost: Total estimated cost = Actual cost + Estimated cost to complete 2018 2072000 + 5328000 7400000 2019 4810000 + 2590000 7400000 2020 7659000 + 0 7659000 *Calculation of revenue: 2018 Actual cost / Total estimated cost * Contract price 2072000 / 7400000 * 10000000 2800000 2019 (Actual cost / Total estimated cost * Contract price) - Revenue of 2018 (4810000 / 7400000 * 10000000) - 2800000 3700000 2019 Contract price - Total revenue of 2018 and 2019 10000000 - 2800000 - 3700000 3500000 Gross Profit =   Revenue - Cost incurred during the year 2018 2800000 - 2072000 728000 2019 3700000 - 2738000 962000 2020 3500000 - 2849000 651000

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.