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What was the initial estimated total income before tax on this contract? A) $900,000 B) $1,200,000 C) $1,440,000 D) $960,000

What was the initial estimated total income before tax on this contract? A) $900,000 B) $1,200,000 C) $1,440,000 D) $960,000

FINANCIAL ACCOUNTING
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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In 2018, NorCal Corporation began construction work under a three-year contract. The contract price is $7,200,000. NorCal uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2018, follow: Balance Sheet Accounts receivable construction contract billings Construction in progress Less contract billings Costs and recognized profit in excess of billings Income Statement Income (before tax) on the contract recognized in 2018 What was the initial estimated total income before tax on this contract? A) $900,000 B) $1,200,000 C) $1,440,000 D) $960,000 $900,000 720,000 $300,000 180,000 $180,000
Transcribed Image Text:In 2018, NorCal Corporation began construction work under a three-year contract. The contract price is $7,200,000. NorCal uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2018, follow: Balance Sheet Accounts receivable construction contract billings Construction in progress Less contract billings Costs and recognized profit in excess of billings Income Statement Income (before tax) on the contract recognized in 2018 What was the initial estimated total income before tax on this contract? A) $900,000 B) $1,200,000 C) $1,440,000 D) $960,000 $900,000 720,000 $300,000 180,000 $180,000
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