Question

JRE2 Inc. entered into a contract to install a pipeline for a fixed price of $2,290,000. JRE2 recognizes revenue upon contract completion. Cost incurred Estimated Cost to Complete 2017 $ 262,000 $ 1,610,000 2018 1,660,000 560,000 2019 510,000 0 In 2018, JRE2 would report gross profit (loss) of:

Answer 1

Answer:loss of $192,000

Step-by-step explanation:

Fixed Price= $2,290,000

Cost Incurred=

2017=$262,000

2018=$1,660,000

2019= $510,000

Estimated Cost to Complete=

2017= $1,610,000

2018= $560,000

2019=0

In 2018;

first we add cost incurred from 2017 to 2018 to the estimated cost to complete for only 2018 giving us

$262,000 + $1,660,000 + $ 560,000 = $2,482,000

and then subtract it from fixed price;

$2,290,000- $2,482,000= -$192,000

ie $(192,000) gross loss.