In 2013, the Westgate Construction Company entered into a contract to construct
ID: 2487283 • Letter: I
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:
2013
2014
2015
Cost incurred during the year
$
3,219,000
$
3,915,000
$
1,722,600
Estimated costs to complete as of year-end
5,481,000
1,566,000
0
Billings during the year
2,700,000
4,434,000
2,866,000
Cash collections during the year
2,430,000
4,300,000
3,200,000
Westgate uses the completed contract method of accounting for long-term construction contracts.
Required:
1.
Calculate the amount of gross profit (loss) to be recognized in each of the three years
2.1
In the journal below, complete the necessary journal entries for the year 2013 (credit various accountsfor construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
2.2
In the journal below, complete the necessary journal entries for the year 2014 (credit various accountsfor construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
2.3
In the journal below, complete the necessary journal entries for the year 2015 (credit various accountsfor construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
3.
Complete the information required below to prepare a partial balance sheet for 2013 and 2014 showing any items related to the contract.
Current asset:
Account receivable????
Construction in process??????
Less: Billings
4.
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.
2013
2014
2015
Costs incurred during the year
$
2,470,000
$
3,835,000
$
3,270,000
Estimated costs to complete as of year-end
5,670,000
3,170,000
0
5.
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.
2013
2014
2015
Costs incurred during the year
$
2,470,000
$
3,835,000
$
4,005,000
Estimated costs to complete as of year-end
5,670,000
4,170,000
0
PLEASE HELP ME!!!! I NEED ANSWERS ON 3,4 and 5 questions!!!!! Waiting for your answer!!!!!!
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
But now in year 2015, since the contract is complete, we record the following entries to close out the accounts used to accumulate costs and billings throughout the entire construction period and to recognize all of the contract's revenues and costs in the year of the contract's completion:
billing a/c Dr. 10000000 $
to Revenue a/c 10000000 $
cost of construction a/c Dr. 8856600
To CIP a/c 8856600
3.
Current asset: 2013 2014
Account receivable 270000$ (2700000 - 2430000) 404000 (4434000-4300000+270000)
Construction in process 3219000 $ 3915000
Less: Billings 2700000 4,434,000
4.
under cost completed method Revenue is recognised in the year when project is completed i.e 2015
total cost incurred = 2470000+ 3835000 + 3270000 = 9575000
total contracted price = 10000000 $
profit = 425000$
5.
total contracted price = 10000000 $
total cost incurred = 2470000+ 3835000 + 4005000 = 10310000
loss = 310000 $
year 2013 2014 2015 CIP A/C Dr. 3219000 3915000 1722600 TO Account payable a/c 3219000 3915000 1722600 Contract receivable a/c Dr 2700000 4434000 2866000 To billing a/c 2700000 4434000 2866000Related Questions
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