In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for$10,000,000. The road was completed in 2026. Information related to the contract is as follows:202420252026$ 3,600,000 $4,050,000$1,485,000Cost incurred during the yearEstimated costs to complete as of year-endBillings during the yearCash collections during the yearAssume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time.Required:1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.2-a. In the journal below, complete the necessary journal entries for the year 2024 (credit "Cash, Materials, etc." forconstruction costs incurred).5,400,0003,000,000 4,650,0002,800,0004,600,0001,350,000 02,350,0002,600,0002-b. In the journal below, complete the necessary journal entries for the year 2025 (credit "Cash, Materials, etc." forconstruction costs incurred).2-c. In the journal below, complete the necessary journal entries for the year 2026 (credit "Cash, Materials, etc." forconstruction costs incurred).3. Complete the information required below to prepare a partial balance sheet for 2024 and 2025 showing any itemsrelated to the contract.4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years, assuming thefollowing costs incurred and costs to complete information.2024$ 2,500,0002025$3,850,000Cost incurred during the yearEstimated costs to complete as of year-end 5,700,000 3,200,000 05. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years, assuming thefollowing costs incurred and costs to complete information.20242025Cost incurred during the year$ 2,500,000 $3,850,000Estimated costs to complete as of year-end 5,700,000 4,200,000 02026$3,300,0002026$4,050,000

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In 2024, 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 2026. Information related to the contract is as follows: 2024 2025 2026 $3,600,000 $4,050,000 $1,485,000 Cost incurred during the year Estimated costs to complete as of year-end 5,400,000 Billings during the year 3,000,000 2,350,000 Cash collections during the year 2,800,000 2,600,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. 1,350,000 0 4,650,000 4,600,000

In 2024, 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 2026. Information related to the contract is as follows: 2024 2025 2026 $3,600,000 $4,050,000 $1,485,000 Cost incurred during the year Estimated costs to complete as of year-end 5,400,000 Billings during the year 3,000,000 2,350,000 Cash collections during the year 2,800,000 2,600,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. 1,350,000 0 4,650,000 4,600,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 88P

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