Question
1)Mars Corporation uses the percentage-of-completion method. At the end of the first year of a $9,000,000 contract, the following information is available: Costs to date:
1)Mars Corporation uses the percentage-of-completion method. At the end of the first year of a $9,000,000 contract, the following information is available:
| Costs to date: | $2,000,000 |
| Estimated costs to complete | 6,000,000 |
| Progress billings during the year | 1,800,000 |
| Cash collected during the year | 1,500,000 |
In the first year, Mars should recognize gross profit of
| a | $750,000 |
| b | $250,000 |
| c | $1,000,000 |
| d | $300,000 |
2) Mars Corporation uses the completed-contract method. At the end of the first year of a $9,000,000 contract, the following information is available:
| Costs to date: | $2,000,000 |
| Estimated costs to complete | 6,000,000 |
| Progress billings during the year | 1,800,000 |
| Cash collected during the year | 1,500,000 |
In the first year, Mars should recognize gross profit of
| a | $1,000,000 |
| b | $300,000 |
| c | $0 |
| d | $250,000 |
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