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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
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: 2023 $3,649, 2ee Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2021 $2,581,880 6,319, eee 2,690,00 1,845, eee 2022 $2,347,880 2,772,00 2,838,00 2,900, eee 5,072,eee 5,255,000 Westgate recognizes revenue over time according to percentage of completion. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round Intermediate calculations. Loss amounts should be Indicated with a minus slgn.) 2021 2022 2023 Revenue Gross profit (loss)
Expert Solution
| Westage construction company | |||
| Particulars | 2021 | 2022 | 2023 |
| contract price | $ 10,000,000.00 | $ 10,000,000.00 | $ 10,000,000.00 |
| cost incurred during the year | $ 2,581,000.00 | $ 2,347,000.00 | $ 3,049,200.00 |
| cost incurred to date | $ 2,581,000.00 | $ 4,928,000.00 | $ 7,977,200.00 |
| estimated cost to complete | $ 6,319,000.00 | $ 2,772,000.00 | $ - |
| Estimated cost | $ 8,900,000.00 | $ 7,700,000.00 | $ 7,977,200.00 |
| Percentage complete | 29% | 64% | 100% |
| Revenue to be recognized | $ 290,000.00 | $ 6,214,400.00 | $ 3,495,600.00 |
| Gross profit/loss | $ (2,291,000.00) | $ 3,867,400.00 | $ 446,400.00 |
| Billing during the year | $ 2,090,000.00 | $ 2,838,000.00 | $ 5,072,000.00 |
| cash collecting during the year | $ 1,845,000.00 | $ 2,900,000.00 | $ 5,255,000.00 |
| Balance sheet | 2021 | 2022 | |
| current asset | $ 290,000.00 | $ 640,000.00 | |
| CIP: work in progress | $ 290,000.00 | $ 640,000.00 | |
| current liabilities | $ 2,090,000.00 | $ 2,838,000.00 | |
| billing | $ 2,090,000.00 | $ 2,838,000.00 |
| working for balance sheet | ||
| CIP | ||
| Accounts | $ | |
| cash | 2581000 | |
| gross loss | -2291000 | |
| Balance at the end of year 2021 | 290000 | |
| Cash | 2347000 | |
| Gross profit | 4053000 | |
| Balance at the end of year 2022 | 6400000 | |
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