Ask Question
27 February, 10:05

Howard Co. had the following first-year amounts for a $7,000,000 construction contract: Actual costs $2,000,000 Estimated costs to complete 6,000,000 Progress billings 1,800,000 Cash collected 1,500,000 What amount should Howard recognize as gross profit (loss) using the percentage-of-completion method?

a. ($1,000,000) b. ($200,000) c. $800,000d. $1,750,000

+2
Answers (1)
  1. 27 February, 10:21
    0
    estimated loss from the project is $1,000,000

    correct option is a. ($1,000,000)

    Explanation:

    given data

    contract price = $7,000,000

    Actual costs = $2,000,000

    Estimated costs = 6,000,000

    Progress billings = 1,800,000

    Cash collected = 1,500,000

    to find out

    What amount should Howard recognize as gross profit (loss)

    solution

    we get in the amount to complete the project that is

    amount to complete = contract price - Actual costs - Estimated costs

    amount to complete = $7,000,000 - $2,000,000 - 6,000,000

    amount to complete = - $1000000

    so estimated loss on project

    so that the total $1,000,000 loss must be recognize

    so correct option is a. ($1,000,000)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Howard Co. had the following first-year amounts for a $7,000,000 construction contract: Actual costs $2,000,000 Estimated costs to complete ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers