In 2016, Omega Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the contract are as follows: 2016 2017 2018 Costs incurred during the year $238,000 $319,600 $105,000 Estimated costs to complete 357,000 139,400 -0- Partial billings 260,000 210,000 380,000 Collections 240,000 200,000 410,000 Refer to Exhibit 17-2. Assuming the performance obligation is satisfied over time, what would be the gross profit in 2016? $255,000 $260,000 $102,000 $425,000
In 2016, Omega Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the contract are as follows: 2016 2017 2018 Costs incurred during the year $238,000 $319,600 $105,000 Estimated costs to complete 357,000 139,400 -0- Partial billings 260,000 210,000 380,000 Collections 240,000 200,000 410,000 Refer to Exhibit 17-2. Assuming the performance obligation is satisfied over time, what would be the gross profit in 2016? $255,000 $260,000 $102,000 $425,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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In 2016, Omega Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the contract are as follows:
Refer to Exhibit 17-2. Assuming the performance obligation is satisfied over time, what would be the gross profit in 2016?
| 2016 | 2017 | 2018 | |
| Costs incurred during the year | $238,000 | $319,600 | $105,000 |
| Estimated costs to complete | 357,000 | 139,400 | -0- |
| Partial billings | 260,000 | 210,000 | 380,000 |
| Collections | 240,000 | 200,000 | 410,000 |
Refer to Exhibit 17-2. Assuming the performance obligation is satisfied over time, what would be the gross profit in 2016?
$255,000
$260,000
$102,000
$425,000
Expert Solution
Step 1
Introduction:-
Gross profit is the profit a company generates after subtracting the expenses of manufacturing and selling its products or the costs of delivering its services. On a company's income statement, gross profit is calculated by subtracting cost of goods sold (COGS) from revenue (sales). These figures can be seen on a company's income statement. Gross profit, often known as gross income or sales profit, is a term used to describe the profit generated by a business.
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