Question
In 2020, Alpha Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the
In 2020, Alpha Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the contract are as follows:
| 2020 | 2021 | 2022 | |
| Costs incurred during the year | $238,000 | $319,600 | $105,00 |
| Estimated costs to complete | 357,000 | 139,400 | -0- |
| Partial Billings | 260,000 | 210,000 | 380,000 |
| Collections | 240,000 | 200,000 | 410,000 |
Under the percentage-of-completion method of revenue recognition, gross profit in 2020 would be
a. $102,000 <-------
b. $260,000
c. $255,000
d. $425,000
Under the percentage-of-completion method of revenue recognition, the balance in Construction in Progress at the end of 2020 would be
a. $238,000
b. $340,000
c. $498,000
d. $578,000
Under the completed contract method of revenue recognition, the balance in Construction in Progress at the end of 2020 would be
a. $238,000.
b. $340,000
c. $498,000
d. $578,000
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