In 2013, the Westgate Construction Company entered into a contract to construct

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 $ 3,096,000 $ 3,870,000 $ 1,797,400 Estimated costs to complete as of year-end 5,504,000 1,634,000 0 Billings during the year 2,600,000 4,366,000 3,034,000 Cash collections during the year 2,340,000 4,200,000 3,400,000 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.

In the journal below, complete the necessary journal entries for the year 2013 (credit various accounts for construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

In the journal below, complete the necessary journal entries for the year 2014 (credit various accounts for construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

In the journal below, complete the necessary journal entries for the year 2015 (credit various accounts for construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Complete the information required below to prepare a partial balance sheet for 2013 and 2014 showing any items related to the contract.

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.

   

   

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.

   

   

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.

   

   

     

     

2.1

In the journal below, complete the necessary journal entries for the year 2013 (credit various accounts for construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

2

In the journal below, complete the necessary journal entries for the year 2014 (credit various accounts for construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

In the journal below, complete the necessary journal entries for the year 2015 (credit various accounts for construction costs incurred). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Complete the information required below to prepare a partial balance sheet for 2013 and 2014 showing any items related to the contract.

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 $ 2,460,000 $ 3,830,000 $ 3,260,000   Estimated costs to complete as of year-end 5,660,000 3,160,000 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 $ 2,460,000 $ 3,830,000 $ 3,990,000   Estimated costs to complete as of year-end 5,660,000 4,160,000 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 $ 2,460,000 $ 3,830,000 $ 3,990,000   Estimated costs to complete as of year-end 5,660,000 4,160,000 0

   

     

     

Explanation / Answer

journal entires

cash

4)2013   2460,000/ 8120000 = 30.30%

Revenue 10m * 30.305          = 3,030,000

less cost incurred                = (2460,000)

profit                                     = $570,000

2014 = 6290,000/ 9450,000 = 66.56%

Revenue                                = 6656,000

less: recognised in 2013    = (3030,000)

Total                                    = 2,970,000

less: Cost incurred           = ($3830,000)

loss                                   = 204,000

2015 100% complete

Revenue                        = 3344,000

Less: cost incurred    = 3260,000

Profit                          = 84,000

2013 Work in progress $3096,000 Accounts paayble and others $3096,000 Amount receivable $2,600,000 to billings $2600,000 Cash $2340,000 to Account receivable $2,340,000 2014 Work in progress $3870,000 To Account payable $3870,000 A/c receivable $4366,000 To billings $4366,000 Cash $4200,000 to Account receivable $4200,000 2015 Work in progress $1,797,400 To Account paayb;e $1,797,400

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