Question
Nova Construction Company (NCC) entered into a contract to build a school for $1,800,000. Construction commenced on May 1, 2020, with a planned completion date
Nova Construction Company (NCC) entered into a contract to build a school for
$1,800,000.
Construction commenced on May 1, 2020, with a planned completion date of December 31, 2022. A summary of the related accounting information is provided below:
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Costs incurred during the year | $400,000 | $500,000 | $650,000 |
| Estimated costs to complete at year-end | 1,200,000 | 600,000 | 0 |
| Billings during the year | 560,000 | 640,000 | 600,000 |
| Cash collections during the year | 500,000 | 310,000 | 990,000 |
How much gross profit would be recognized in fiscal 2020 if NCC uses the percentage of completion method?
A. $130,000
B. $100,000
C. $180,000
D. 50000
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Managerial Accounting
Authors: James Jiambalvo
4th edition
9780470546888, 9780470333341, 470546883, 470333340, 978-0470578797
