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In 2021, 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 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Costs incurred during the year Estimated costs to complete as of year-end Revenue Gross profit (loss) 2022 2021 $2,184,000 $3,510,000 5,616,000 2,106,000 2,120,000 3,574,000 1,860,000 3,400,000 2021 4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs ncurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest vhole dollar amount. Loss amounts should be indicated with a minus sign.) 2022 2023 $2,316,600 2023 4,306,000 4,740,000 2022 2021 2023 $2,184,000 $3,860,000 $3,260,000 5,616,000 3,160,000 0 0

In 2021, 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 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Costs incurred during the year Estimated costs to complete as of year-end Revenue Gross profit (loss) 2022 2021 $2,184,000 $3,510,000 5,616,000 2,106,000 2,120,000 3,574,000 1,860,000 3,400,000 2021 4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs ncurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest vhole dollar amount. Loss amounts should be indicated with a minus sign.) 2022 2023 $2,316,600 2023 4,306,000 4,740,000 2022 2021 2023 $2,184,000 $3,860,000 $3,260,000 5,616,000 3,160,000 0 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Case Study: Westgate Construction Company In 2021, 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 2023. Information related to the contract is as follows: #### Contract Details | Year | Cost Incurred During the Year | Estimated Costs to Complete as of Year-End | Billings During the Year | Cash Collections During the Year | |------|-------------------------------|------------------------------------------|--------------------------|----------------------------------| | 2021 | $2,184,000 | $5,616,000 | $2,120,000 | $1,860,000 | | 2022 | $3,510,000 | $2,106,000 | $3,574,000 | $3,400,000 | | 2023 | $2,316,000 | $0 | $4,306,000 | $4,740,000 | Westgate recognizes revenue over time according to the percentage of completion. ### Revenue and Gross Profit (Loss) Calculation 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.)** | Year | Costs Incurred During the Year | Estimated Costs to Complete as of Year-End | |------|--------------------------------|------------------------------------------| | 2021 | $2,184,000 | $5,616,000 | | 2022 | $3,860,000 | $3,160,000 | | 2023 | $3,260,000 | $0 | #### Revenue and Gross Profit (Loss) Summary | Year | Revenue | Gross Profit (Loss) | |------|---------|---------------------| | 2021 | | | | 2022 | | | | 2023 | | | ### Explanation In this exercise, Westgate Construction Company follows the percentage of completion method to recognize revenue. The revenue and gross profit (loss) for each year are determined based on the costs incurred relative to the total estimated costs. The details provided above illustrate the yearly expenses and projections crucial
Transcribed Image Text:### Case Study: Westgate Construction Company In 2021, 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 2023. Information related to the contract is as follows: #### Contract Details | Year | Cost Incurred During the Year | Estimated Costs to Complete as of Year-End | Billings During the Year | Cash Collections During the Year | |------|-------------------------------|------------------------------------------|--------------------------|----------------------------------| | 2021 | $2,184,000 | $5,616,000 | $2,120,000 | $1,860,000 | | 2022 | $3,510,000 | $2,106,000 | $3,574,000 | $3,400,000 | | 2023 | $2,316,000 | $0 | $4,306,000 | $4,740,000 | Westgate recognizes revenue over time according to the percentage of completion. ### Revenue and Gross Profit (Loss) Calculation 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.)** | Year | Costs Incurred During the Year | Estimated Costs to Complete as of Year-End | |------|--------------------------------|------------------------------------------| | 2021 | $2,184,000 | $5,616,000 | | 2022 | $3,860,000 | $3,160,000 | | 2023 | $3,260,000 | $0 | #### Revenue and Gross Profit (Loss) Summary | Year | Revenue | Gross Profit (Loss) | |------|---------|---------------------| | 2021 | | | | 2022 | | | | 2023 | | | ### Explanation In this exercise, Westgate Construction Company follows the percentage of completion method to recognize revenue. The revenue and gross profit (loss) for each year are determined based on the costs incurred relative to the total estimated costs. The details provided above illustrate the yearly expenses and projections crucial
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The year 2021 was correct, But the year 2022 and 2023 were incorrect answers 

In 2021, 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 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Costs incurred during the year Estimated costs to complete as of year-end evenue Gross profit (loss) $ $ Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs curred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest nole dollar amount. Loss amounts should be indicated with a minus sign.) 2021 2021 $2,184,000 2,800,000 616,000 2022 2022 $3,510,000 5,616,000 2,106,000 2,120,000 3,574,000 4,306,000 1,860,000 3,400,000 4,740,000 2023 $2,316,600 2021 2022 $2,184,000 $3,860,000 5,616,000 3,160,000 2023 2023 $3,260,000 0 0
Transcribed Image Text:In 2021, 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 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Costs incurred during the year Estimated costs to complete as of year-end evenue Gross profit (loss) $ $ Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs curred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest nole dollar amount. Loss amounts should be indicated with a minus sign.) 2021 2021 $2,184,000 2,800,000 616,000 2022 2022 $3,510,000 5,616,000 2,106,000 2,120,000 3,574,000 4,306,000 1,860,000 3,400,000 4,740,000 2023 $2,316,600 2021 2022 $2,184,000 $3,860,000 5,616,000 3,160,000 2023 2023 $3,260,000 0 0
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