Stoney Construction Co. enters a 3-year contract to build a new warehouse facility. Stoney follows...
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Accounting
Stoney Construction Co. enters a 3-year contract to build a new warehouse facility. Stoney follows Completed Contract Method under U.S. GAAP and adopts progress billing accounting for its construction project. Information for Years 1, 2, and 3 is shown below:
Year 1
Year 2
Year 3
Sales price
$ 2,800,000
$ 2,800,000
$ 2,800,000
Estimated costs
$ 1,600,000
$ 2,000,000
$ 2,000,000
Costs incurred to date (paid in cash)
$ 400,000
$ 900,000
$ 2,000,000
Billed to date
$ 250,000
$ 1,150,000
$ 2,800,000
Received in cash to date
$ 190,000
$ 950,000
$ 2,800,000
1) What is the gross profit recognized in Year 3? (Show work/ individual calculations)
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