Nichols Construction Company (NCC)entered into a Contract to Build a Shopping

question 67

Multiple Choice

Nichols Construction Company (NCC) entered into a contract to build a shopping complex for $1,900,000. 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 would the balance in accounts receivable be on the balance sheet of NCC at the end of 2021 if NCC uses the percentage of completion method?

• A)$130,000
• B)$390,000
• C)$790,000
• D)$1,100,000

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Definitions:

Second World War

A worldwide war that took place between 1939 and 1945, drawing participation from nearly every nation on the planet, including all the major powers, which eventually split into two rival military coalitions: the Allies and the Axis.

Tuskegee

A historically black university located in Tuskegee, Alabama, known for its role in African American education and the famous Tuskegee Airmen during World War II.

Aviation

The design, development, production, operation, and use of aircraft, especially heavier-than-air aircraft, encompassing both commercial and military aspects.

Spingarn Medal

An award given annually by the NAACP since 1914 to African Americans of distinguished achievement.