Question

Contract

Contract

Price

Biling

Through

12/31/15

Collections

Through

12/31/15

Estimated

Cost to

12/31/15

Cost to

Complete

1

4,800,000

4,725,000

3,900,000

3,225,000

       —-

2

3,600,000

1,500,000

1,000,000

820,000

1,800,000

3

3,300,000

1,900,000

1,800,000

2,250,000

1,200,000

 

 

 

 

 

 

Gorman Construction Co. began operations in 2015. Constructionactivity for 2015 is shown below. Gorman uses thecompleted-contract method.

12. Which of the following should be shown on the incomestatement 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

13.     Which of the following should beshown on the balance sheet at December 31, 2015 related to Contract2?

a.   Inventory, $680,000

b.   Inventory, $820,000

c.   Current liability, $680,000

d.   Current liability, $1,500,000

14.     Which of the following should beshown on the balance sheet at December 31, 2015 related to Contract3?

a.   Inventory, $200,000

b.   Inventory, $350,000

c.   Inventory, $2,100,000

d.   Inventory, $2,250,000