ACCT301A - Are the gross profit (in red) correct shown in the image? Thank you!
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Stoney Construction Co. enters a 3-year contract to build a new warehouse facility. Stoney follows Completed Contract Method under U.S. GAAP and adopts “progress billing” accounting for its construction project. Information for Years 1, 2, and 3 is shown below:
Year 1 Year 2 Year 3
Sales price $ 2,800,000 $ 2,800,000 $ 2,800,000
Estimated costs $ 1,600,000 $ 2,000,000 $ 2,000,000
Costs incurred to date $ 400,000 $ 900,000 $ 2,000,000
Billed to date $ 250,000 $ 1,150,000 $ 2,800,000
Received in cash to date $ 190,000 $ 950,000 $ 2,800,000
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assume that the total estimated costs are $3,000,000 in Year 2. All other amounts remain the same as above. What is the gross profit recognized in Year 2 under this new assumption?
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