Blossom Construction Corporation contracted to construct a building for $7240000. Construction began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Year ended December 31, 2024 2025 Costs incurred $2805000 $2120000 Estimated costs to complete 1870000 Blossom uses the percentage-of-completion method as the basis for income recognition. For the years ended December 31, 2024, and 2025, respectively, Blossom should report gross profit of O $1539000 and $776000. $1389000 and $926000. $0 and $2120000. $4435000 and $2805000,

Blossom Construction Corporation contracted to construct a building for $7240000. Construction began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Year ended December 31, 2024 2025 Costs incurred $2805000 $2120000 Estimated costs to complete 1870000 Blossom uses the percentage-of-completion method as the basis for income recognition. For the years ended December 31, 2024, and 2025, respectively, Blossom should report gross profit of O $1539000 and $776000. $1389000 and $926000. $0 and $2120000. $4435000 and $2805000,

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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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

Blossom Construction Corporation contracted to construct a building for $7240000.
Construction began in 2024 and was completed in 2025. Data relating to the contract are
summarized below:
Year ended
December 31,
2024
2025
Costs incurred
$2805000
$2120000
Estimated costs to complete
1870000
Blossom uses the percentage-of-completion method as the basis for income recognition. For the
years ended December 31, 2024, and 2025, respectively, Blossom should report gross profit of
$1539000 and $776000.
O $1389000 and $926000.
O $0 and $2120000.
$4435000 and $2805000.

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