Early in 2018,Forest Ltd.signed a contract to construct a warehouse.Forest's management estimated the gross profit on the contract to be $740,000,as indicated by the following:

At the end of 2018,the status of the work on the contract was as follows:

How much revenue can be recognized on this contract for 2018,assuming that Forest uses the
Percentage of completion basis for long-term construction contracts (round to nearest dollar)?
A)$333,000
B)$863,333
C)$1,575,000
D)$1,711,957

Question

Early in 2018,Forest Ltd.signed a contract to construct a warehouse.Forest's management estimated the gross profit on the contract to be $740,000,as indicated by the following:

At the end of 2018,the status of the work on the contract was as follows:

How much revenue can be recognized on this contract for 2018,assuming that Forest uses the
Percentage of completion basis for long-term construction contracts (round to nearest dollar)?
A)$333,000 
B)$863,333 
C)$1,575,000 
D)$1,711,957

Quizplus · Accepted Answer

C)1,350,000 / (1,350,000 + 1,650,000)× 3,500,000 = 1,575,000