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Use the following information for questions 86 through 88.
Gorman Construction Co. began operations in 2010. Construction activity for 2010 is shown below. Gorman uses the completed-contract method.
Billings Collections Estimated
Contract Through Through Costs to Costs to
Contract Price 12/31/10 12/31/10 12/31/10 Complete
1 $3,200,000 $3,150,000 $2,600,000 $2,150,000
2 3,600,000 1,500,000 1,000,000 820,000 $1,880,000
3 3,300,000 1,900,000 1,800,000 2,250,000 1,200,000
88. Which of the following should be shown on the balance sheet at December 31, 2010 related to Contract 3?
a. Inventory, $200,000
b. Inventory, $350,000
c. Inventory, $2,100,000
d. Inventory, $2,250,000
Answer is A
**Can someone explain why?**
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