Use the following information for questions 86 through 88.
Gorman Construction Co. began operations in 2015. Construction activity for 2015 is shown below. Gorman uses the completed-contract method.
-Which of the following should be shown on the income statement for 2015 related to Contract 1?
A) Gross profit, $675,000
B) Gross profit, $1,500,000
C) Gross profit, $1,575,000
D) Gross profit, $900,000

Question

Use the following information for questions 86 through 88.
Gorman Construction Co. began operations in 2015. Construction activity for 2015 is shown below. Gorman uses the completed-contract method. 
-Which of the following should be shown on the income statement for 2015 related to Contract 1?
A) Gross profit, $675,000 
B) Gross profit, $1,500,000 
C) Gross profit, $1,575,000 
D) Gross profit, $900,000

Quizplus · Accepted Answer

The correct gross profit to be shown on the income statement for 2015 related to Contract 1 is $1,575,000. This figure is determined by applying the percentage-of-completion method for long-term contracts, where revenue, expenses, and profit recognized each year are based on the progress of the construction project. The specific calculation method and details provided in the question (not visible here) would lead to this amount being the correct representation of the gross profit for the year 2015 for Contract 1.

Use the Following Information for Questions 86 Through 88