Use the Following Information for the Following Questions:
in 2020 $\ldots \ldots \ldots \ldots \ldots \ldots \ldots\$150,000$

question 36

Multiple Choice

Use the following information for the following questions:
In 2020, Cement Inc. began a three year construction contract for $ 3,500,000. Cement uses the percentage-of-completion method. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentation relating to this contract for calendar 2020 follow:
Statement of Financial Position
Current assets:
Accounts receivable $\ldots \ldots \ldots \ldots \ldots \ldots \ldots\$150,000$
Contract asset/liability $\ldots \ldots \ldots \ldots \ldots \ldots \ldots105,000$
Contract costs $\$ 425,000$ less Billings of $\$ 320,000$ )

Income Statement
Income (before tax) on the contract recognized in $2020 \ldots \ldots \ldots . . \quad \$ 105,000$
-What was the initial estimated gross profit on this contract?

• A) $ 381,430
• B) $ 405,231
• C) $ 650,204
• D) $ 864,703

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Definitions:

Body Weight

A measure of an individual's mass, usually considered in relation to height to assess health through indicators like BMI (Body Mass Index).

Reading Ability

The capacity to understand, interpret, and derive meaning from written words.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together, without implying causation.

Causation

The relationship between cause and effect, where an action or event directly leads to another action or event.