In 2016, 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 2018. Information related to the contract is as follows:
2016 2017 2018
Cost incurred during the year $ 2,291,000 $ 3,555,000 $ 2,259,400
Estimated costs to complete as of year-end 5,609,000 2,054,000 0
Billings during the year 2,110,000 3,736,000 4,154,000
Cash collections during the year 1,855,000 3,500,000 4,645,000
Westgate recognizes revenue over time according to percentage of completion.
Required:
1. Calculate the amount of revenue and gross profit to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)
2-a. In the journal below, complete the necessary journal entries for the year 2016 (credit "Various accounts" for construction costs incurred). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2-b. In the journal below, complete the necessary journal entries for the year 2017 (credit "Various accounts" for construction costs incurred). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2-c. In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
3. Complete the information required below to prepare a partial balance sheet for 2016 and 2017 showing any items related to the contract. Indicate whether any of the amounts shown are contract assets or contract liabilities. (Do not round intermediate calculations.)
4. Calculate the amount of revenue and gross profit to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)
2016 2017 2018
Cost incurred during the year $ 2,291,000 $ 3,855,000 $ 3,255,000
Estimated costs to complete as of year-end 5,609,000 3,155,000 0
5. Calculate the amount of revenue and gross profit to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)
2016 2017 2018
Cost incurred during the year $ 2,291,000 $ 3,855,000 $ 4,065,000
Estimated costs to complete as of year-end 5,609,000 4,210,000 0