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:

Syllabi

Plural of syllabus; detailed outlines or summaries of the subjects to be covered in an educational course or training program.

Motivated

Refers to the drive or desire to achieve goals, pursue activities, or accomplish tasks.

Chewing Gum

A flavored and sweetened rubbery substance intended to be chewed without being swallowed.

Distracting

Causing one's attention to be diverted from a task or train of thought.