Question 18

Ivanhoe Constructors, Inc. has consistently used the percentage-of-completion method of recognizing income. In 2018, Ivanhoe started work on a $51000000 construction contract that was completed in 2019. The following information was taken from Ivanhoe's 2018 accounting records:

Progress billings $15500000

Costs incurred 14800000

Collections 9620000

Estimated costs to complete 29500000

What amount of gross profit should Ivanhoe have recognized in 2018 on this contract?

a)$3350000

c)$6700000

c)$2238375

d)$4461625