Gorman Construction Co. began operations in 2015. The following table provides information about each construction project for the year.

		Billings	Collections	Costs Incurred	Estimated
	Contract	Through	Through	Through	Costs to
Contract	Price	12/31/15	12/31/15	12/31/15	Complete
1	$3,200,000	$3,150,000	$2,600,000	$2,150,000	—
2	3,600,000	1,500,000	1,000,000	820,000	$1,880,000
3	3,300,000	1,900,000	1,800,000	2,250,000	1,200,000

Required:

Compute the requested amounts under each of the following separate scenarios:

a/ Assuming Gorman uses the completed-contract method, how much gross profit should be included on the 2015 income statement for Contract 1?

b/ Assuming Gorman uses the percentage-of-completion method, how much revenue should be included on the 2015 income statement for Contract 2?

c/ Assuming Gorman uses the completed-contract method, what account(s)/amount(s) should appear on the balance sheet at December 31, 2015 related to Contract 2?

d/ Assuming Gorman uses the completed-contract method, what account(s)/amount(s) should appear on the income statement for 2015 related to Contract 3?

Answer rating: 100% (QA)

a For contract 1 completed contract method Gross profit is Billings through 12312015 3150000 Less Co... View the full answer