Use the Following Information for the Following Questions:
Folk Construction

question 66

Multiple Choice

Use the following information for the following questions:
Folk Construction Corp. began operations in 2020. Construction activity for 2020 is shown below. Folk uses the completed-contract method.
$\begin{array}{c}\begin{array}{c}\\\\\underline{ \text { Contract}}\\1 \\2 \\3\end{array}\begin{array}{c}\\\text {Contract}\\\underline{ \text {Price}}\\\$ 1,280,000 \\ 1,440,000 \\1,320,000 \end{array}\begin{array}{c}\text {Billings}\\\text {Through}\\\underline{12 / 31 / 20 }\\\$ 1,260,000 \\600,000 \\760,000\end{array}\begin{array}{c}\text {Collections}\\\text {Through Costs to}\\\underline{12 / 31 / 20 }\\ \$ 1,040,000 \\400,000 \\700,000\end{array}\begin{array}{c}\text {Estimated}\\\text {Costs to}\\\underline{12 / 31 / 20}\\\$ 860,000\\328,000\\900,000\end{array}\begin{array}{c}\\\\\underline{ \text {Complete}}\\-\\\$ 752,000 \\480,000\end{array}\end{array}$

-Which of the following should be shown on the income statement for 2020 related to Contract 1?

• A) gross profit, $ 180,000
• B) gross profit, $ 240,000
• C) gross profit, $ 400,000
• D) gross profit, $ 420,000

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Definitions:

Funeral Expenses

Costs associated with the burial or cremation and memorial services of a deceased person.

Investment Commissions

Investment commissions are fees charged by brokers or agents for executing transactions, including buying or selling securities on behalf of their clients.

Insurance Expenses

The cost incurred by a business or individual for purchasing insurance policies to protect against risk.