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In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...

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Accounting

In 2018, the Westgate Construction Company entered into acontract to construct a road for Santa Clara County for$10,000,000. The road was completed in 2020. Information related tothe contract is as follows:


2018
2019
2020
Cost incurred during the year
2,400,000
3,600,000
2,200,000
Estimated costs to complete as of year-end
5,600,000
2,000,000
0
Billings during the year
2,000,000
4,000,000
4,000,000
Cash collections during the year
1,800,000
3,600,000
4,600,000

Westgate recognizes revenue over time according to percentageof completion.

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













































Answer & Explanation Solved by verified expert
3.9 Ratings (356 Votes)

Balance Sheet (Partial) 2018 2019
Current Assets:
Accounts receivable $       2,00,000 $       6,00,000
Construction in progress $     30,00,000 $      75,00,000
Less: Billings $   -20,00,000 $     -60,00,000
Cost in excess of billings $     10,00,000 $     15,00,000
Current Liabilities:
Working Notes: 2018 2019
Cost incurred during the year $     24,00,000 $     36,00,000
Add: Cost incurred in previous year $     24,00,000
Cost incurred till date (i) $     24,00,000 $     60,00,000
Add: Estimated cost to complete $     56,00,000 $     20,00,000
Total cost (ii) $     80,00,000 $     80,00,000
Percentage Completed [(iii) = (i) / (ii)] 30% 75%
Construction in progress [$10000000 X (iii)] $     30,00,000 $     75,00,000
Billings during the year $     20,00,000 $     40,00,000
Less: Cash collections during the year $     18,00,000 $     36,00,000
Accounts Receivable $       2,00,000 $       4,00,000
Add: Previous year balance $       2,00,000
Total Accounts receivables $       2,00,000 $       6,00,000

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