Gorman Construction Co. began operations in 2015. Construction activity for 2015

Question

Gorman Construction Co. began operations in 2015. Construction activity for 2015 is shown below. Gorman uses the completed contract method. Which of the following should be shown on the balance sheet at December 31, 2015 related to Contract 3? Bilings Collections Through Estimated ThroughCosts toCosts to 12/31/15Complete Contract ContractPrice 12/31/1512/31/15 $4,800,000 4725,000 $3 900,000 3 225,000 820,000$1 880 000 3,300,000 1,900,000 1.800,0002,250,0001200,000 3,600 000o 1,500,0001,000,000 Minimized View Inventory, $200,000 Inventory, $2,250,000 inventory, $2,100,000

Explanation / Answer

Under Completed contract method,

Costs incurred acconted by Debiting Work In Progress and Crediting Accounts Payable.

In this case, Work In Progress inventory shall be $2,250,000( contract 3).

So Option 2 is Correct Answer.

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