Yang Construction Company entered into a contract to build a new airport terminal for $2,500,000.Construction commenced on August 1,2017,with a planned completion date of December 31,2019.A summary of the costs,billings,and collections is provided below:

Yang uses the percentage of completion method.How much gross profit would Yang recognize in 2018?
A)$100,000 loss
B)$75,000 loss
C)$50,000 profit
D)$100,000 profit

Question

Yang Construction Company entered into a contract to build a new airport terminal for $2,500,000.Construction commenced on August 1,2017,with a planned completion date of December 31,2019.A summary of the costs,billings,and collections is provided below:

Yang uses the percentage of completion method.How much gross profit would Yang recognize in 2018?

Yang uses the percentage of completion method.How much gross profit would Yang recognize in 2018?
A)$100,000 loss 
B)$75,000 loss 
C)$50,000 profit 
D)$100,000 profit

Quizplus · Accepted Answer

B)($500,000 + $700,000)/ ($500,000 + $700,000 + $1,200,000)× ($2,500,000 - $2,400,000)= $50,000
$50,000 - [$500,000 / ($500,000 + $1,500,000)× ($2,500,000 - $2,000,000)] = $(75,000)

Yang Construction Company Entered into a Contract to Build a New