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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
please show work!
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