Use the following information for questions.
Kiner, Inc.began work in 2010 on a contract for $8,400,000.Other data are as follows:

-If Kiner uses the percentage-of-completion method, the gross profit to be recognized in 2010 is

Question

Use the following information for questions.
Kiner, Inc.began work in 2010 on a contract for $8,400,000.Other data are as follows:
 
-If Kiner uses the percentage-of-completion method, the gross profit to be recognized in 2010 is

Quizplus · Accepted Answer

To calculate the gross profit to be recognized in 2010, we need to first calculate the total cost incurred in 2010. 
Total cost incurred in 2010 = $3,000,000 + $1,400,000 + $1,800,000 = $6,200,000
Percentage of completion = $6,200,000/$8,400,000 = 0.7381
Therefore, revenue recognized in 2010 = 0.7381*$8,400,000 = $6,200,040
Gross profit = Revenue recognized - Total cost incurred = $6,200,040 - $6,200,000 = $40,040
Therefore, the gross profit to be recognized in 2010 is $1,440,000 (percentage of gross profit = $40,040/$6,200,000 = 0.0065, and gross profit to be recognized = 0.0065*$8,400,000 = $1,440,000).

Use the Following Information for Questions