JRE2 Incorporated entered into a contract to install a pipeline for a fixed price of $2,365,000. JRE2 recognizes revenue upon contract completion. Estimated Cost to Complete $1,660,000 621,000 0 Cost incurred 2023 $ 272,000 1,710,000 2024 2025 560,000 In 2025, JRE2 would report gross profit (loss) of: Multiple Choice $(177,000). $84,000 $61,000. $30 323

JRE2 Incorporated entered into a contract to install a pipeline for a fixed price of $2,365,000. JRE2 recognizes revenue upon contract completion. Estimated Cost to Complete $1,660,000 621,000 0 Cost incurred 2023 $ 272,000 1,710,000 2024 2025 560,000 In 2025, JRE2 would report gross profit (loss) of: Multiple Choice $(177,000). $84,000 $61,000. $30 323

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

JRE2 Incorporated entered into a contract to install a pipeline for a fixed price of $2,365,000. JRE2 recognizes revenue upon contract completion.
Estimated Cost to
Complete.
$ 1,660,000
621,000
0
Cost incurred.
2023
2024
2025
$ 272,000
1,710,000
560,000
In 2025, JRE2 would report gross profit (loss) of:
.
Multiple Choice
$(177,000)
$84,000,
$61,000
$20.222

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