H. Tillman performed legal services for J. Laney. Due to a cash shortage, an agreement was reached whereby J. Laney. would pay H
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Answer:
Gross Profit in Year 1 = $200000
so correct option is B. $200,000
Explanation:
given data
historical preservation project = $2,500,000
time = 2 year
estimated costs = $2,000,000
Actual costs Years 1 = $800,000
Actual costs Years 2 = $900,000
to find out
what amount of gross profit would Superior report in Year 1
solution
we find here first Percentage Completion that is express as
Percentage Completion = Cost to date ÷ Estimated Total Cost .............1
put her value we get
Percentage Completion =
Percentage Completion = 40%
and
Revenue Recognized will be here
Revenue Recognized = Percentage Completion × Total estimated Revenue ...............2
Revenue Recognized = 40 % × 25000000
Revenue Recognized = 1000,0000
so here Gross Profit in Year 1 will be
Gross Profit in Year 1 = Revenue Recognized - Cost to date of year 1 ..............3
Gross Profit in Year 1 = 1000,0000 - v800000
Gross Profit in Year 1 = $200000
so correct option is B. $200,000