Yang Construction Company Entered into a Contract to Build a New

Yang Construction Company entered into a contract to build a new airport terminal for $2,500,000. Construction commenced on August 1, 2020, with a planned completion date of December 31, 2022. A summary of the costs, billings, and collections is provided below: $$\begin{array} { | l | r | r | r | } \hline & \mathbf { 2 0 2 0 } & \mathbf { 2 0 2 1 } & \mathbf { 2 0 2 2 } \\\hline \text { Costs incurred during the year } & 500,000 & 700,000 & 1,100,000 \\\hline \text { Estimated costs to complete at year end } & 1,500,000 & 1,200,000 & 0 \\\hline \text { Billings during the year } & 440,000 & 1,000,000 & 1,060,000 \\\hline \text { Cash collections during the year } & 400,000 & 900,000 & 1,200,000 \\\hline\end{array}$$ Yang uses the percentage of completion method. How much gross profit would Yang recognize in 2021?

A) $100,000 loss
B) $75,000 loss
C) $50,000 profit
D) $100,000 profit

Correct Answer:

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