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 $2,072,000 5,328,000 2,160,000 1,880,000 2019 $2,738,000 2,590,0e0 2,650,000 2,700,000 2020 $2,849,000 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 5,190,0e0 5,420,000 Westgate recognizes revenue over time according to percentage of completion es Required 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.) 2018 2019 2020 Revenue Gross profit (loss)

Explanation / Answer

2018 2019 2020 Revenue 2800000 3700000 3500000 Gross profit(Revenue-Total cost incurred so far) 728000 962000 651000 Completion costs + estimated remaining costs to complete the contract Total Cost estimation for 2018 = 2018 2019 2020 =2072000+5328000 =2072000+2738000+2590000 =2072000+2738000+2849000 7400000 7400000 7659000 Total accumulated costs incurred so far = 2072000 4810000 7659000 Total cost for particular year 2072000 2738000 2849000 Revenue to be recognized/Construction in progress = 2072000*10000000/7400000 4810000*10000000/7400000 =7659000*10000000/7659000 2800000 6500000 10000000

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