Answer:
The correct answer is $350,000
Explanation:
Contract price = $4,200,000
Costs incurred = $1,750,000
Estimated costs to complete = $1,750,000
Progress billings= $900,000
Collections on progress billings= $800,000
<u>Contract price - total estimated cost</u>
<u />
$4,200,000 - ($1,750,000 + $1,750,000)
= $4,200,000 - $3,500,000
= $700,000
<u>one-half of the estimated costs of this construction project were incurred</u>
$1,750,000 ÷ ($1,750,000 + $1,750,000)
= $1,750,000 ÷ $3,500,000
= 0.5
In Barr's 20X0 income statement,what amount of gross profit should be reported for this project?
$700,000 x 0.5 = $350,000
$350,000 should be reported as gross profit for the 20X0 income statement.
