Hayes Construction Corporation contracted to construct a building for $7,500,000. Construction began in 2022 and was completed in 2023. Data relating to the contract are summarized below: Year ended December 31, 20222023 Costs incurred $3,000,000$2,250,000 Estimated costs to complete 2,000,0000 Hayes uses the percentage-of-completion method as the basis for income recognition. For the years ended December 31, 2022, and 2023, respectively, Hayes should report gross profit ofa.$1,350,000 and $900,000. b.$4,500,000 and $3,000,000. c.$1,500,000 and $750,000. d.$0 and $2,250,000.

Percentage of completion is a method of accounting used for long-term projects. It enables companies…

Answered: Hayes Construction Corporation…

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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Hayes Construction Corporation contracted to construct a building for $7,500,000. Construction began in 2022 and was completed in 2023. Data relating to the contract are summarized below:
			Year ended
			December 31,
			2022	2023
Costs incurred		$3,000,000	$2,250,000
Estimated costs to complete		2,000,000	0

Hayes uses the percentage-of-completion method as the basis for income recognition. For the years ended December 31, 2022, and 2023, respectively, Hayes should report gross profit of
a.	$1,350,000 and $900,000.
b.	$4,500,000 and $3,000,000.
c.	$1,500,000 and $750,000.
d.	$0 and $2,250,000.

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