Required information [The following information applies to the questions display

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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 2,590,000 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 5,190,000 5,420,000 Westgate recognizes revenue over time according to percentage of completion. 5. 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.) 2020 $4,140,000 2018 2019 Cost incurred during the year Estimated costs to complete as of year-end $2,072,000 $3,880,000 4,260,000 5,328,000 2018 $ 2,800,000 $ 728,000 2019 2020 Revenue Gross profit (loss)

Explanation / Answer

Particulars 2018 2019 2020 Contract Price                  10,000,000                  10,000,000                  10,000,000 Cost Incurred during the year                    2,072,000                    3,880,000                    4,140,000 Estimated costs to complete at end of year                    5,328,000                    4,260,000 Total estimated and actual construction costs                    7,400,000                    8,140,000                    4,140,000 Total Gross Profit                    2,600,000                    1,860,000                    5,860,000 Cost Incurred during the year                    2,072,000                    3,880,000                    4,140,000 % of Completion-Actual Costs/Estimated total Project Cost 28% 48% 100% (2072000/7400000) (3880000/8140000) (4140000/4140000) REVENUE AND GROSS PROFT 2018 2019 2020 Revenue Reconized in 2018(10000000*28%)                    2,800,000 Cost of Construction                    2,072,000 Gross Profit/(Loss)                        728,000 Revenue Reconized to date (10000000*48%)                    4,766,585 Less-Revenue Recognised in 2018                    2,800,000 Revenue Reconized in 2019                    1,966,585 Cost of Construction                    3,880,000 Gross Profit/(Loss)                  (1,913,415) Revenue Reconized to date (10000000*100%)                  10,000,000 Less-Revenue Recognised in 2019                    4,766,585 Revenue Reconized in 2020                    5,233,415 Cost of Construction                    4,140,000 Gross Profit/(Loss)                    1,093,415

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