Tullis Construction Enters into a Long-Term Fixed Price Contract to Build

question 76

Multiple Choice

Tullis Construction enters into a long-term fixed price contract to build an office tower for $10,100,000. In the first year of the contract Tullis incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete the project are $5,000,000. Tullis billed $5,000,000 in year 1 and collected $3,500,000 by the end of the year. How much should Tullis report as Accounts Receivable at the end of year 1 on the balance sheet assuming the use of the completed-contract method?

• A) $0
• B) $1,500,000
• C) $5,000,000
• D) $8,500,000

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