roblem 55 Percentageofcompletion method LO55 In 2013 the Wes

roblem 5-5 Percentage-of-completion method [LO5-5]

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:

1.

Calculate the amount of gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations.)

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. Do not round intermediate calculations.)

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. Do not round intermediate calculations.)

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. Do not round intermediate calculations.)

3.

Complete the information required below to prepare a partial balance sheet for 2013 and 2014 showing any items related to the contract. (Do not round intermediate calculations.)

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. (Do not round intermediate calculations.)

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. (Do not round intermediate calculations.)

rev: 09_25_2012, 02_20_2013_QC_27008, 03_12_2013_QC_27298, 03_22_2013_QC_28049, 10_11_2013_QC_37327, 10_16_2013_QC_37327

References

eBook & Resources

ProblemProblem 5-5 Percentage-of-completion method [LO5-5]Learning Objective: 05-05 Discuss the revenue recognition issues involving multiple-deliverable contracts, software, and franchise sales.

Ask your instructor a questionCheck my workPrevious attempt

©2015 McGraw-Hill Education. All rights reserved.

Solution

1.

Gross profit / loss (year)=Billing in Year - cost incurred in year

Gross profit / loss (2013)=1,000,000-1,400,000 =-400,000 (loss)

Gross profit / loss (2014)=3,550,000-3,150,000 =-400,000 (loss)

Gross profit / loss (2015)=5,450,000-2,695,000 =,2,755000 (profit)