Question

Blossom, Inc. began work in 2021 on a contract for $20720000. Other data are as follows: 2021 2022 Costs incurred to date $8880000 $13900000 Estimated costs to complete 5920000 0 Billings to date 6960000 20800000 Collections to date 4960000 17900000 If Blossom uses the percentage-of-completion method, the gross profit to be recognized in 2021 is $3552000. $4000000. $5560000. $5920000.

Answer 1

the gross profit using the percentage-of-completion method is $3,552,000

Step-by-step explanation:

The computation of the gross profit using the percentage-of-completion method is given below

= Contract Value × given percentage - total cost incurred

= $20,720,000 × $8,880,000 ÷ ($8,880,000 + $5,920,000) - $8,880,000

= $12,432,000 - $8,880,000

= $3,552,000

hence, the gross profit using the percentage-of-completion method is $3,552,000