Use the following to answer questions 29-30:
Gomez, Inc. began work in 2010 on contract #3814, which provided for a contract price of $7,200,000. Other details follow:
|
2010
|
2011
|
|
Costs incurred during the year
|
$1,200,000
|
$3,675,000
|
|
Estimated costs to complete, as of December 31
|
3,600,000
|
0
|
|
Billings during the year
|
1,350,000
|
5,400,000
|
|
Collections during the year
|
900,000
|
5,850,000
|
29. Assume that Gomez uses the percentage-of-completion method of accounting. The portion of the total gross profit to be recognized as income in 2010 is
A) $450,000. B) $600,000. C) $1,800,000. D) $2,400,000.
30. Assume that Gomez uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2011 is
A) $900,000. B) $1,350,000. C) $2,325,000. D) $7,200,000