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Cherry Co. enters into a long-term fixed price contract to build a warehouse...

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Accounting

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Cherry Co. enters into a long-term fixed price contract to build a warehouse for $30,000,000. In the first year of the contract, Cherry incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete are $12,000,000. Cherry billed $10,000,000 in years 1 and collected $9,000,000 by the end of year 1. How much gross profit should Cherry recognize in Year 1 assuming the use of the completed-contract method? O $0 O $2,600,000 O $3,000,000 O $4,000,000 O $5,600,000

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