Question
In: Accounting
Tullis Construction enters into a long-term fixed price contract to build an office tower for $10,600,000....
Tullis Construction enters into a long-term fixed price contract to build an office tower for $10,600,000. In the first year of the contract Tullis incurs $1,600,000 of cost and the engineers determined that the remaining costs to complete are $4,800,000. Tullis billed $3,600,000 in year 1 and collected $3,500,000 by the end of the end of the year. How much gross profit should Tullis recognize in Year 1 assuming the use of the percentage-of-completion method?
a. $0
b. $1,050,000
c. $2,650,000
d. $4,250,000
Solutions
Expert Solution
The Answer is B - $10,50,000
Tullis should recognize the Gross Profit of $ 10,50,000
Percentage of Completion Method
(A) Costs incurred to date $ 16,00,000
Estimated future costs 48,00,000
(B) Estimated total costs 64,00,000
Progress billings to date 36,00,000
Cash collected to date 35,00,000
C) Est. total gross profit (1,06,00,000-B) 42,00,000
(D) Percent Complete (A/B) 25%
Total GP Recognized to Date (C*D) 10,50,000
Current Yr. Gross Profit Recognized 10,50,000
.
.
.
.
ALL THE BEST !!!
ekkarill92 answered 1 year agoRelated Solutions
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