Please show all work: Hollywood Construction Company recognizes revenue over time according to...
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Accounting
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Hollywood Construction Company recognizes revenue over time according to percentage of completion for its long-term construction contracts. During 2024, Hollywood began work on a $3,000,000 fixed-fee construction contract, which was completed in 2027. The accounting records disclosed the following data at year-end:
| Cumulative contract costs incurred | Estimated costs to complete at end of year | |
|---|---|---|
| 2024 | $ 200,000 | $ 1,800,000 |
| 2025 | 1,100,000 | 1,100,000 |
| 2026 | 2,000,000 | 400,000 |
For the 2026 year, Hollywood should have recognized gross profit on this contract of:
Multiple Choice
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$500,000
-
$225,000
-
$100,000
-
$266,667
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