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At the beginning of 2021, the Harding Construction Company received a contract to build an office building for $5 million. Harding will construct the building according to specifications provided by the buyer, and the project is estimated to take three years to complete. According to the contract, Harding will bill the buyer in installments over the construction period according to a prearranged schedule. Information related to the contract is as follows: 2021 2022 2023 Construction costs incurred during the year $1,500,000 $1,000,000 $1,600,000 Construction costs incurred in prior years 1,500,000 2.500,000 Cumulative actual construction costs $1,500,000 $2.500,000 $4,100,000 Estimated costs to complete at end of year 2,250,000 1,500,000 Total estimated and actual construction costs $3,750,000 $4,000,000 $4,100,000 Billings made during the year $1,200,000 $2.,000,000 $1,800,000 Cash collections during the year 1,000.000 1,400,000 2.600,000 Assume the company recognizes revenue from long-term contracts over time based on the perocentage of completion. How much gross profit from long-term contracts should the company recognize in 2023? O $325,000 O $300,000 O $275,000 O $250,000

At the beginning of 2021, the Harding Construction Company received a contract to build an office building for $5 million. Harding will construct the building according to specifications provided by the buyer, and the project is estimated to take three years to complete. According to the contract, Harding will bill the buyer in installments over the construction period according to a prearranged schedule. Information related to the contract is as follows: 2021 2022 2023 Construction costs incurred during the year $1,500,000 $1,000,000 $1,600,000 Construction costs incurred in prior years 1,500,000 2.500,000 Cumulative actual construction costs $1,500,000 $2.500,000 $4,100,000 Estimated costs to complete at end of year 2,250,000 1,500,000 Total estimated and actual construction costs $3,750,000 $4,000,000 $4,100,000 Billings made during the year $1,200,000 $2.,000,000 $1,800,000 Cash collections during the year 1,000.000 1,400,000 2.600,000 Assume the company recognizes revenue from long-term contracts over time based on the perocentage of completion. How much gross profit from long-term contracts should the company recognize in 2023? O $325,000 O $300,000 O $275,000 O $250,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of 2021, the Harding Construction Company received a contract to build an office building for $5 million. Harding will construct the building according to specifications provided by the buyer, and the project is estimated to take three years to complete. According to the contract, Harding will bill the buyer in installments over the construction period according to a prearranged schedule. Information related to the contract is as follows: 2021 2022 2023 Construction costs incurred during the year $1,500,000 $1,000,000 $1,600,000 Construction costs incurred in prior years 1,500,000 2,500,000 Cumulative actual construction costs $1,500,000 $2.500.000 $4,100,000 Estimated costs to complete at end of year 2,250,000 1.500.000 Total estimated and actual construction costs $3.750,000 $4,000,000 $4,100,000 Billings made during the year $1,200,000 $2.000,000 $1,800,000 Cash collections during the year 1,000,000 1,400,000 2,600,000 Assume the company recognizes revenue from long-term contracts over time based on the percentage of completion. How much gross profit from long-term contracts should the company recognize in 2023? O $325,000 O S300,000 O $275,000 O $250,000 Activato Windows
Transcribed Image Text:At the beginning of 2021, the Harding Construction Company received a contract to build an office building for $5 million. Harding will construct the building according to specifications provided by the buyer, and the project is estimated to take three years to complete. According to the contract, Harding will bill the buyer in installments over the construction period according to a prearranged schedule. Information related to the contract is as follows: 2021 2022 2023 Construction costs incurred during the year $1,500,000 $1,000,000 $1,600,000 Construction costs incurred in prior years 1,500,000 2,500,000 Cumulative actual construction costs $1,500,000 $2.500.000 $4,100,000 Estimated costs to complete at end of year 2,250,000 1.500.000 Total estimated and actual construction costs $3.750,000 $4,000,000 $4,100,000 Billings made during the year $1,200,000 $2.000,000 $1,800,000 Cash collections during the year 1,000,000 1,400,000 2,600,000 Assume the company recognizes revenue from long-term contracts over time based on the percentage of completion. How much gross profit from long-term contracts should the company recognize in 2023? O $325,000 O S300,000 O $275,000 O $250,000 Activato Windows
Scale Co. offers a promotional coupon with every product it sells. The coupon gives the Scale Co. customer an opportunity to buy an electric drill that normally sells for $80 for only $60 (a 25% discount). The coupon must be redeemed within one year of the purchase. Scale Co. estimates that 70% of customers will take advantage of the coupon. What is the stand-alone selling price of the coupon? O $16 O $18 O $14 O $20 Activate Windows
Transcribed Image Text:Scale Co. offers a promotional coupon with every product it sells. The coupon gives the Scale Co. customer an opportunity to buy an electric drill that normally sells for $80 for only $60 (a 25% discount). The coupon must be redeemed within one year of the purchase. Scale Co. estimates that 70% of customers will take advantage of the coupon. What is the stand-alone selling price of the coupon? O $16 O $18 O $14 O $20 Activate Windows
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