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Required information [The following information applies to the questions displayed below.]    In 2018, the Westgate Construction Company entered...

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Accounting

Required information

[The following information applies to the questionsdisplayed below.]
  
In 2018, the Westgate Construction Company entered into a contractto construct a road for Santa Clara County for $10,000,000. Theroad was completed in 2020. Information related to the contract isas follows:

201820192020
Cost incurred during the year$2,204,000$3,192,000$2,424,400
Estimated costs to complete as of year-end5,396,0002,204,0000
Billings during the year2,140,0003,256,0004,604,000
Cash collections during the year1,870,0003,200,0004,930,000


Westgate recognizes revenue over time according to percentage ofcompletion.

3. Complete the information required below toprepare a partial balance sheet for 2018 and 2019 showing any itemsrelated to the contract. (Do not round intermediatecalculations.)

Answer & Explanation Solved by verified expert
4.1 Ratings (492 Votes)

Balance Sheet (Partial) 2018 2019
Current Assets:
Accounts receivable $       2,70,000 $       3,26,000
Construction in progress $     29,00,000 $      71,00,000
Less: Billings $   -21,40,000 $     -53,96,000
Cost in excess of billings $       7,60,000 $     17,04,000
Current Liabilities:
Working Notes: 2018 2019
Cost incurred during the year $     22,04,000 $     31,92,000
Add: Cost incurred in previous year $     22,04,000
Cost incurred till date (i) $     22,04,000 $     53,96,000
Add: Estimated cost to complete $     53,96,000 $     22,04,000
Total cost (ii) $     76,00,000 $     76,00,000
Percentage Completed [(iii) = (i) / (ii)] 29% 71%
Construction in progress [$10000000 X (iii)] $     29,00,000 $     71,00,000
Billings during the year $     21,40,000 $     32,56,000
Less: Cash collections during the year 1870000 3200000
Accounts Receivable $       2,70,000 $           56,000
Add: Previous year balance $       2,70,000
Total Accounts receivables $       2,70,000 $       3,26,000

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