Part A.) Tullis Construction enters into a long-term fixed price contract to build an office...
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Accounting
Part A.) Tullis Construction enters into a long-term fixed price contract to build an office tower for $30,000,000. In the first year of the contract Tullis incurs $6,000,000 of cost and the engineers determined that the remaining costs to complete are $10,000,000. How much gross profit should Tullis recognize in Year 1 assuming the use of the percentage-of-completion method?
A. 200,000 loss
B. 14,000,000 loss,
C. 0 profit
D. 7,000,000
Part B) Tullis Construction enters into a long-term fixed price contract to build an office tower for $10,100,000. In the first year of the contract Tullis incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete are $5,000,000. Tullis billed $5,000,000 in year 1 and collected $3,500,000 by the end of the year. How much should Tullis report as Accounts Receivable as the end of Year 1 assuming on the balance sheet assuming the use of the completed-contract method?
A) 0
B) 8,500,000
C) 1,500,000
D) 5,000,000
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