Problem 6-11 (Algo) Long-term contract; revenue recognition upon completion [LO6-9] 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 2021 $1,584,000 5,616,000 1,200,000 1,000,000 2022 $3,240,000 2,376,000 3,624,000 2,800,000 2023 $2,613,600 0 5,176,000 6,200,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. 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 2021 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs incurred). 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract.
Problem 6-11 (Algo) Long-term contract; revenue recognition upon completion [LO6-9] 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 2021 $1,584,000 5,616,000 1,200,000 1,000,000 2022 $3,240,000 2,376,000 3,624,000 2,800,000 2023 $2,613,600 0 5,176,000 6,200,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. 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 2021 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs incurred). 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Problem 6-11 (Algo) Long-term contract; revenue recognition upon completion [LO6-9]
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.
2021
$1,584,000
5,616,000
1,200,000
1,000,000
Cost incurred during the year
Estimated costs to complete as of year-end)
2022
$3,240,000
2,376,000
3,624,000
2,800,000
Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time.
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 2021 (credit "Various accounts" for construction costs
incurred).
Cost incurred during the year
Estimated costs to complete as of year-end
2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs
incurred).
2021
$2,580,000
5,780,000
2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs
incurred).
3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 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.
2023
$2,613,600
2021
$2,580,000
5,780,000
2022
$3,890,000
3,280,000
5,176,000
6,200,000
2022
$3,890,000
4,280,000
0
2023
$3,280,000
5. 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.
0
2023
$4,170,000
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8d15b370-5e3a-42fa-9ab3-f0647a47f6da%2Faa0e037a-0c2b-4535-aa14-6947c4a94a4c%2Fjrcywug_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 6-11 (Algo) Long-term contract; revenue recognition upon completion [LO6-9]
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.
2021
$1,584,000
5,616,000
1,200,000
1,000,000
Cost incurred during the year
Estimated costs to complete as of year-end)
2022
$3,240,000
2,376,000
3,624,000
2,800,000
Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time.
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 2021 (credit "Various accounts" for construction costs
incurred).
Cost incurred during the year
Estimated costs to complete as of year-end
2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs
incurred).
2021
$2,580,000
5,780,000
2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs
incurred).
3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 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.
2023
$2,613,600
2021
$2,580,000
5,780,000
2022
$3,890,000
3,280,000
5,176,000
6,200,000
2022
$3,890,000
4,280,000
0
2023
$3,280,000
5. 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.
0
2023
$4,170,000
0
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