Question: required information problem 510 longterm contract revenue recognition over time...

Required information

Problem 5-10 Long-term contract; revenue recognition over time [LO5-8, 5-9]

[The following information applies to the questions displayed below.]
  
In 2018, 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 2020. Information related to the contract is as follows:

	2018			2019			2020
Cost incurred during the year	$	2,610,000		$	3,162,000		$	2,230,800
Estimated costs to complete as of year-end		6,390,000			2,028,000			0
Billings during the year		2,100,000			3,672,000			4,228,000
Cash collections during the year		1,850,000			3,000,000			5,150,000

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 sign.)

2-a. In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred). Record Construction costs, progress billings, cash collections, and gross profit (loss) for 2018.
2-b. In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred).Record Construction costs, progress billings, cash collections, and gross profit (loss) for 2019.
2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred).Record Construction costs, progress billings, cash collections, and gross profit (loss) for 2020.

3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract. (Do not round intermediate calculations.)

4. Calculate the amount of revenue and gross profit (loss) 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.)

	2018			2019			2020
Cost incurred during the year	$	2,610,000		$	3,850,000		$	3,250,000
Estimated costs to complete as of year-end		6,390,000			3,150,000			0

5. Calculate the amount of revenue and gross profit (loss) 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.)

	2018			2019			2020
Cost incurred during the year	$	2,610,000		$	3,850,000		$	4,050,000
Estimated costs to complete as of year-end		6,390,000			4,200,000			0