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    Ramos completed contract method: Profit to be recognized in

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    Please help answer the following problem.

    Ramos, Inc. began work in 2008 on contract #3814, which provided for a contract price of $7,200,000. Other details follow:

    2008 2009
    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

    Assume that Ramos uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2009 is
    Choose one answer.

    a. $900,000
    b. $1,350,000
    c. $2,325,000
    d. $7,200,000

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    Solution Preview

    Since there is no profit recorded in 2008 (completed contract method only records profits upon completion unless there are expected ...

    Solution Summary

    This solution helps with a problem about total gross profit. Computations are shown and a comment is made about using "income" rather than "revenue" in the question.