Dante Construction Company uses the percentage-of-completion method of accounting. During 2016, Dante

contracted to build an apartment house for Rizza for P10,000,000. Dante estimated that total costs would

amount to P8,000,000 over the period of construction. In connection with this contract, Dante incurred

P1,000,000 of construction costs during 2016. Dante billed and collected P1,500,000 from Rizza in 2016. How

much gross profit should Dante recognize in 2016?

a.

P300,000

b.

P187,500

c.

P250,000

d.

P125,000