In 2024, 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 2026. Information related to the contract is as follows: 2024 $ 2,291,000 5,609,000 1,900,000 1,700,000 2025 Cost incurred during the year $ 3,555,000 2,054,000 Estimated costs to complete as of year-end Billings during the year 3,946,000 Cash collections during the year 3,500,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. Cost incurred during the year Estimated costs to complete as of year-end 2026 $ 2,259,400 2024 $ 2,510,000 5,710,000 Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. 2-a. In the journal below, complete the necessary journal entries for the year 2024 (credit "Cash, Materials, etc." for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2025 (credit "Cash, Materials, etc." for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2026 (credit "Cash, Materials, etc." for construction costs incurred). 3. Complete the information required below to prepare a partial balance sheet for 2024 and 2025 showing any items related to the contract. 4. 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. 2025 $ 3,855,000 3,210,000 4,154,000 4,800,000 0 2026 $ 3,210,000 0

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Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.