Question: In 2007 Dreyer Corporation began construction work under a three-year contract. The contract price is $800,000. Dreyer uses the percentage-of-completion method. The financial statement presentations

In 2007 Dreyer Corporation began construction work under a three-year contract. The contract price is $800,000. Dreyer uses the percentage-of-completion method. The financial statement presentations relating to this contract on December 31, 2007 follow:

Required
1. How much cash did Dreyer collect during 2007?
2. What was the initial estimated total income before tax on thiscontract?

Balance Sheet Accounts receivable Construction in progress Less contract billings Cost of uncompleted contract in excess of billings $15,000 $50,000 (47,000) 3,000 Income Statement Gross profit (before tax) on the contract $10,000

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