In 2016, the Westgate Construction Company entered into a contract to construct

Question

In 2016, 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 2018. Information related to the contract is as folows: 2018 2017 $2,291,000 $3,555,000 $2,259,400 2,054,000 1,900,000 3,946,000 4,154,000 1,710,000 3,500,000 4,800,000 2016 Cost incurred during the year Estimated costs to complete as of year-5,609,000 end Billings during the year Cash collections during the year Westgate Construction uses the completed contract method of accounting for long-term construction contracts. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Loss amounts should be indicated with a minus sign.) Revenue Gross profit (loss) 2-a. In the journal below, complete the necessary journal entries for the year 2016 (credit "Various accounts" for construction costs incurred). (if no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list |view general journal 2016 Construction in progress 2,291,000 Various accounts 2,291,000 2016 Accounts receivable 1,900,000 Billings on construction contract 1,900,000 2016 Cash 1,710,000! Accounts receivable 1,710,000 2016 No journal entry required

Explanation / Answer

Answer 1

Partial BalanceSheet

CURRENT LIABILTIES

Answer 4

Answere 5

2016 2017 2018 Cotract price 10000000 10000000 10000000 Cost incurred 2291000 3555000 2259400 Cost Incurred upto date(1) 2291000 5846000 8105400 Estiated Cost (2) 5609000 2054000 0 Total Cost (3) 7900000 7900000 8105400 Total est. gross profit (loss) 2100000 2100000 1894600 Gross Profit (loss) recognized this period 0 2100000 (205400) Revenue 0 0 9794600

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