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Noah Construction Company is building a large complex for a contract price of $5,000,000. This is a three-year project estimated to cost $4,000,000 and the
Noah Construction Company is building a large complex for a contract price of $5,000,000. This is a three-year project estimated to cost $4,000,000 and the following information is available:
| YR 1 | yr 2 | yr 3 | |
| Cost incurred | 1,000 | 1500 | 1250 |
| Estimate complete | 3000 | 1500 | 0 |
| Billings | 750 | 1750 | 2500 |
| Collected | 500 | 1500 | 3000 |
Using the percentage-of-completion method of revenue recognition, how much income is recognized in Year 2?
| $250,000 | ||
| $375,000 | ||
| $625,000 | ||
| $3,125,000 |
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