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The contract price for a long-term contract is $20,000. The contracting firm recognizes revenue over time based on the percentage of completion. $4,000 of cost
The contract price for a long-term contract is $20,000. The contracting firm recognizes revenue over time based on the percentage of completion. $4,000 of cost was incurred on the contract in the first year, and $2,667 of gross profit was recognized at the end of the first year. $6,000 of cost was incurred on the contract in the second year, and estimated remaining cost to complete as of the end of the second year was $4,000. Compute the amount of gross profit to be recognized for the second year.
a. 4,286
b. 1,619
c. 2,010
d. 1,842
e. 1,492
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