Required information Problem 5-10 Long-term contract; revenue recognition over t

Question

Required information Problem 5-10 Long-term contract; revenue recognition over time (LOS.8, 5-9) 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 Part 3 of 5 1.42 $10,000,000. The road was completed in 2020, Information related to the contract is as follows: polnts 2019 $2,581,000 $2,347,000 $3,049,200 2018 Estimated costs to complete as of year-end Billings during the year Cash collection 6,319.0002,772.000 2,090,000 2,838,000 5,072,000 1,945, 000 2,900,000 5,255,000 Westgate recognizes revenue over time according to percentage of completion. Problem 5-10 Part 3 d below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the 3. Complete the information require contract. (Do not round intermediate calculations.) Balance Sheet (Partial) 2018 2019 S 6.400,000 $ 2,900,000 (2.090,00 ss: Billings 1.472,000 810,000 Current liabilties

Explanation / Answer

Balance sheet (partial) 2018 2019 Current Assets Accounts receivable 245000 183000 Construction in progress 2900000 6400000 Less : Billings 2090000 4928000 Costs and profit in excess of billings 810000 1472000 Current Liabilities Advance from Santa Clara Company 0 0 7700 10000 4928 6400 Total Cost estimation for 2019 = Completion costs + estimated remaining costs to complete the contract =2581000+2347000+2772000 7700000 Total costs incurred so far = =2581000+2347000 4928000 Revenue to be recognized/Construction in progress = =(4928000*10000000)/7700000 6400000 Accounts receivable = Billings done - Cash collection

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