In 2025, Sunland Construction Corp. began construction work under a 3-year contract. The contract price was $910,000. Sunland uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2025, are shown below. Balance Sheet Accounts receivable Construction in process Less: Billings Costs and recognized profit in excess of billings a) Income Statement $71,000 65,600 Portion of contract billings collected $ Income (before tax) on the contract recognized in 2025 $24,850 How much cash was collected in 2025 on this contract? $18,000 5,400
In 2025, Sunland Construction Corp. began construction work under a 3-year contract. The contract price was $910,000. Sunland uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2025, are shown below. Balance Sheet Accounts receivable Construction in process Less: Billings Costs and recognized profit in excess of billings a) Income Statement $71,000 65,600 Portion of contract billings collected $ Income (before tax) on the contract recognized in 2025 $24,850 How much cash was collected in 2025 on this contract? $18,000 5,400
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:In 2025, Sunland Construction Corp. began construction work under a 3-year contract. The contract price was $910,000. Sunland
uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the
proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this
contract at December 31, 2025, are shown below.
Accounts receivable
Construction in process
Less: Billings
Costs and recognized profit in excess of billings
Balance Sheet
(a)
Income Statement
Income (before tax) on the contract recognized in 2025
$71,000
Portion of contract billings collected
eTextbook and Media
65,600
How much cash was collected in 2025 on this contract?
$18,000
5,400
$24,850
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