In
2018, the Westgate Construction Company entered into a contract to
construct a road for Santa Clara...
Free
60.1K
Verified Solution
Link Copied!
Question
Accounting
In2018, the Westgate Construction Company entered into a contract toconstruct a road for Santa Clara County for $10,000,000. The roadwas completed in 2020. Information related to the contract is asfollows:
2018
2019
2020
Costincurred during the year
2,400,000
3,600,000
2,200,000
Estimatedcosts to complete as of year-end
5,600,000
2,000,000
0
Billingsduring the year
2,000,000
4,000,000
4,000,000
Cashcollections during the year
1,800,000
3,600,000
4,600,000
2-a.In thejournal below, complete the necessary journal entries (constructioncosts, progress billings, cash collections, gross profit/loss) forthe year 2018 (credit "Various accounts" for construction costsincurred).
2-b.In thejournal below, complete the necessary journal entries (constructioncosts, progress billings, cash collections, gross profit/loss) forthe year 2019 (credit "Various accounts" for construction costsincurred).
2-c.In thejournal below, complete the necessary journal entries (constructioncosts, progress billings, cash collections, gross profit/loss) forthe year 2020 (credit "Various accounts" for construction costsincurred).
Answer & Explanation
Solved by verified expert
3.8 Ratings (736 Votes)
2018
2019
2020
Contract price
$ 10,000,000
$ 10,000,000
$ 10,000,000
Actual costs to date
$
2,400,000
$
6,000,000
$
8,200,000
Estimated costs
$
5,600,000
$
2,000,000
total estimated costs
$
8,000,000
$
8,000,000
$
8,200,000
Estimated gross profit (loss)
$
2,000,000
$
2,000,000
$
1,800,000
revenue recognition
2018:(24000000/8000000)=
30%
30%*10000000=
$
3,000,000
2019:(6000000/8000000)=
75%
(75%*10000000)-3000000=
$
4,500,000
2020:10000000-3,000,000-4500000=
$
2,500,000
Gross profit (loss) recognition:
2018:3000000-2400000=
$
600,000
2019:4500000-3600000=
$
900,000
2020:2500000-2200000=
$
300,000
Journal entries
2018
2019
2020
Debit
Credit
Debit
Credit
Debit
Credit
Construction in progress
$
2,400,000
$
3,600,000
$ 2,200,000
Various accounts
$
2,400,000
$ 3,600,000
$ 2,200,000
Accounts receivable
$
2,000,000
$
4,000,000
$ 4,000,000
Billings on construction contract
$
2,000,000
$ 4,000,000
$ 4,000,000
Cash
$
1,800,000
$
3,600,000
$ 4,600,000
Accounts receivable
$
1,800,000
$ 3,600,000
$ 4,600,000
Construction In progress
$
600,000
$
900,000
$
300,000
Cost of construction
$
2,400,000
$
3,600,000
$ 2,200,000
Revenue from long term contracts
$
3,000,000
$ 4,500,000
$ 2,500,000
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
