Pool Contractors (PC)entered into a Contract to Build a Solar

question 64

Multiple Choice

Pool Contractors (PC) entered into a contract to build a solar heated swimming complex for $1,800,000. Construction commenced on July 1, 2020, with a planned completion date of December 31, 2022. A summary of the related accounting information is provided below: $$\begin{array} { | l | r | r | r | } \hline & \mathbf { 2 0 2 0 } & \mathbf { 2 0 2 1 } & \mathbf { 2 0 2 2 } \\\hline \text { Costs incurred during the year } & 400,000 & 500,000 & 650,000 \\\hline \text { Estimated costs to complete at year end } & 1,200,000 & 600,000 & 0 \\\hline \text { Billings during the year } & 560,000 & 640,000 & 600,000 \\\hline \text { Cash collections during the year } & 500,000 & 310,000 & 990,000 \\\hline\end{array}$$ How much gross profit would be recognized in fiscal 2021 if PC uses the percentage of completion method?

• A)$50,000
• B)$100,000
• C)$130,000
• D)$180,000

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Definitions:

Gallery

A room or building for the display or sale of artworks, but can also refer to a collection or exhibition of art.

Agency Costs

Expenses incurred due to conflicts of interest between shareholders and management, typically including monitoring, contracting, and opportunity costs.

Spot Checks

Random inspections or audits conducted without prior notice to ensure compliance or quality.

Employee Work

The tasks and duties performed by an individual employed by an organization.