In 2018 the Westgate Construction Company entered into a con

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 2019 2020 Cost incurred during the year $ 2,490,000 $ 3,984,000 $ 2,008,600 Estimated costs to complete as of year-end 5,810,000 1,826,000 0 Billings during the year 2,030,000 4,444,000 3,526,000 Cash collections during the year 1,815,000 3,900,000 4,285,000 Westgate recognizes revenue over time according to percentage of completion. rev: 09_15_2017_QC_CS-99734 3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract. (Do not round intermediate calculations.)

Solution

Computation of % Completion & Gross Profit & Revenue 2018 2019 2020 Contract price $10,000,000 $10,000,000 $10,000,000 Estimated cost: Cost To date $2,490,000 $6,305,000 $9,520,000 Estimated costs To Complete $5,810,000 $3,115,000 Estimated Total costs $8,300,000 $9,420,000 $9,520,000 % Completed 30% 67% 100% Estimated Total gross profit $1,700,000 $580,000 $480,000 Total Gross profit To be Recognized $510,000 $388,206 $480,000 Gross profit Recognized in Previous years $0 $510,000 $388,206 Gross profit Recognized during the current year $510,000 -$121,794 $91,794 Revenue to be recognized $2,030,000 $4,444,000 $3,526,000