Bella Construction Co. uses the percentage-of-completion method. In 20x1, Bella

Question

Bella Construction Co. uses the percentage-of-completion method. In 20x1, Bella began work on a contract for $2564531; it was completed in 20x2. The following cost data pertain to this contract Year ended December 31 20x1 20x2 Costs incurred during the year 801703 537183 480252 Estimated costs to complete at the of year The amount of gross profit to be recognized on the income statement for the year ended December 31, 20x2 is: Select one: a. 745393 b. 1225645 X c. 1282576 d. 423554 Check The correct answer is: 423554

Explanation / Answer

20x1 20x2 Contract price 2564531 2564531 Cost Incured During the Year 801703 537183 Cost Incured during previous period 801703 Estimated cost to Complete 480252 0 Total Cost 1281955 1338886 Gross Profit(Contract price -Total Cost) 1282576 1225645 Less Porfit recgnized ealier period 802091 Percentage Of Completion(Cost Incured During the Year/Total Cost) 62.54% 100% Profit Recognized During the period,(1225645-802091) 802091 423554 Profit Recognized During the period 423554

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