A project was correctly accounted for under the percentage-of-completion method. At the end of the project, the Construction-in-Process account includes total debits and credits of $ 3,500,000. Assuming that total gross profit of $ 1,200,000 was recognized throughout the contract, total construction costs were
A) $ 4,600,000.
B) $ 3,500,000.
C) $ 2,300,000.
D) $ 2,100,000.

Question

Quizplus · Accepted Answer

The Construction-in-Process account includes both the costs incurred and the recognized gross profit. Given the total debits and credits are $3,500,000 and the gross profit is $1,200,000, the total construction costs are $3,500,000 - $1,200,000 = $2,300,000.

A Project Was Correctly Accounted for Under the Percentage-Of-Completion Method