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Flynn Construction Co. has consistently used the percentage-of-completion method of recognizing revenue. During 2007, Flynn entered into a fixed-price contract to construct an office building

Flynn Construction Co. has consistently used the percentage-of-completion method of recognizing revenue. During 2007, Flynn entered into a fixed-price contract to construct an office building for $12,000,000. Information relating to the contract is as follows:

At December 31

2007 2008

Percentage of completion 15% 45%

Estimated total cost at completion $9,000,000 $9,600,000

Gross Profit Recognized (cumulative) $600,000 $1,440,000

Contract costs incurred during 2008 were

a. $2,880,000

b. $2,970,000

c. $3,150,000

d. $4,320,000

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