Question

In 2013, 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 2015. Information related to the contract is as follows:


Westgate uses the percentage-of-completion method of accounting for long-term construction contracts.
Required:
1. Calculate the amount of gross profit to be recognized in each of the three years.
2. Prepare all necessary journal entries for each of the years (credit various accounts for construction costs incurred).
3. Prepare a partial balance sheet for 2013 and 2014 showing any items related to the contract.
4. Calculate the amount of gross profit to be recognized in each of the three years assuming the following costs incurred and costs to complete information:



5. Calculate the amount of gross profit to be recognized in each of the three years assuming the following costs incurred and costs to completeinformation:


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  • CreatedDecember 23, 2013
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