Summary Data for Benedict Construction Co

question 135

Multiple Choice

Summary data for Benedict Construction Co.'s (BCC) Job 1227, which was completed in 2018, are presented below: Estimated cost to complete:
- Assuming BCC recognizes revenue over time according to percentage of completion for this contract, the gross profit recognized in 2017 would be (rounded to the nearest thousand) :

• A) $33,000.
• B) $36,000.
• C) $69,000.
• D) $30,000.

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Definitions:

Lock Box System

A service offered by banks to process payments received by a company directly into its bank account, speeding up the collection and utilization of funds.

Check Clearing

The process of transferring funds from the check writer's account to the recipient's account, finalizing the payment.

Compensating Balance

A minimum account balance that a borrower is required to maintain as a condition for obtaining a loan, it compensates the bank by offsetting the cost of providing the loan.

Effective Interest Rate

The interest rate on a loan or financial product restated from the nominal interest rate as an interest rate with annual compound interest payable in arrears.